Economics, Econometrics and Finance
4 years ago

Currency carry trades can trigger destabilizing dynamics in foreign exchange markets.

RePEc: Research Papers in Economics
Carry Trades, Monetary Policy and Speculative Dynamics
Guillaume Plantin, Hyun Song Shin

Paper Summary

Currency carry trades can either stabilize or destabilize the foreign exchange market, depending on how much money flows into a country. When too much money comes in, the currency can go up for a while, then suddenly drop.

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