Header and navigation menu

Page content

Which exchange rate matters to global investors?

How do exchange rates affect the portfolio decisions of global investors? We examine detailed statistics to measure how bond investors respond to changes in the US dollar, the euro and the currencies of emerging markets and advanced economies. Our findings show that euro-based investors respond differently to various exchange rates and currency mismatches. To explain these findings better, we build a portfolio choice model that considers the different roles of local, foreign and reference currencies. […]