Austrian exporters' overall exposure to exchange rate risk is relatively limited. This is because the majority of exports are concentrated in markets with comparatively stable currencies. The policy brief notes that exchange rates are often disconnected from macroeconomic fundamentals, but are instead driven, at least in the short term, by financial shocks, which increases exchange rate volatility.
However, Austria's membership in the euro area provides a structural advantage, allowing many firms to invoice their exports in euros, which significantly reduces short-term currency risk, especially for small and medium-sized enterprises (SMEs). Survey evidence shows 88% of exposed Austrian firms price in euros, and 49% use hedging instruments to protect against exchange rate risks, with trade insurance being the dominant method.