Template-Type: ReDIF-Article 1.0
Author-Name: Sophie Reine TSANG EBODE
Author-Email: sophie.tsang.ebode@hec.ac.ma
Author-Workplace-Name: HEC Rabat Business School
Author-Name: Hanane EL AMRAOUI
Author-Email: hanane.elamraoui@hec.ac.ma
Author-Workplace-Name: HEC Rabat Business School
Author-Name: Sihame LAASAS
Author-Email: sihame.laasas@hec.ac.ma
Author-Workplace-Name: HEC Rabat Business School
Title: Hedging Strategies for Foreign Exchange Reserves in the CEMAC Region: A Derivatives-Based Approach – The Case of BEAC
Abstract: This study examines how the Bank of Central African States (BEAC) can enhance the management of its foreign exchange reserves using derivative instruments. Through a dual methodology – a benchmarking analysis of central bank hedging practices and an econometric regression on BEAC data (2016–2024) – the paper identifies best practices and quantifies reserve performance drivers. Results show that several emerging and advanced central banks (e.g. Nigeria, Ghana, U.S. Fed) use FX forwards, swaps, and options to stabilize their currency and reserve portfolios. For BEAC, the estimated regression explains only ~13.4% of quarterly reserve return variance, with no individual coefficient significant at the 5% level. Notably, higher FX volatility is associated with lower reserve returns (β ≈ –40.8, p≈0.068). These findings suggest that BEAC’s current conservative strategy limits responsiveness to shocks. Key recommendations include developing an interbank derivatives market, deploying FX auctions with derivatives, and establishing swap lines for liquidity. Future research should incorporate additional risk factors and assess derivatives’ legal/institutional frameworks. Classification JEL: G21, E58, F31 Paper type: Empirical Research
Keywords: Foreign exchange reserves, Derivatives, Hedging strategies, CEMAC, BEAC
Journal: International Journal of Accounting, Finance, Auditing, Management and Economics
Pages: 271-286
Volume: 7
Issue: 1
Year: 2026
File-URL: https://ijafame.org/index.php/ijafame/article/view/2233
File-Format: text/html
File-URL: https://ijafame.org/index.php/ijafame/article/view/2233/2277
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Handle: RePEc:aoa:journl:v:7:y:2026:i:1:p:271-286