China’s currency recently experienced its sharpest decline since it unpegged from the US dollar nearly nine years ago. China wants a more volatile exchange rate to introduce two-way risk in the currency market, meaning a continued steady rise in its currency is not a foregone conclusion. To help offset slowing investment growth, Chinese authorities may…
“In Search of FX Fair Value” Mark Astley, Ric Deverell, and Bhaveer Shah, Credit Suisse, October 2013 Developing accurate exchange rate forecasts remains an elusive goal for economists and investors alike. Nonetheless, several accepted methods for determining currency fair values exist. Applying Credit Suisse’s own methodology, the bank’s currency strategists note that the U.S. dollar…
As modern portfolios evolve, investors continue to seek new ways to diversify exposures and mitigate volatility. Currency exposure, once thought of exclusively as a risk to be hedged away, is today being embraced by some in mandates designed to generate returns. The form of such a mandate may vary widely, from a discrete, active strategy,…