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The Rise of Fund Managers in Foreign Exchange:Will Fundamentals Ultimately Dominate?

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  • Thomas Gehrig
  • Lukas Menkhoff

Abstract

This paper analyses the behaviour and motivation of fund managers in foreign exchange markets reflected in questionnaire evidence. We find that fund managers and FX dealers differ significantly. Fund managers rely more on fundamentals, basically due to their longer forecasting horizons, and reject non-fundamental influences on exchange rates more than FX dealers. However, neither can fund managers be considered as pure fundamentalists. Non-fundamentalist positions markedly influence short-term decision-making. They inspire ambivalent views about market imperfections and these views seem to become stronger over time. This latter change counterbalances the strengthening fundamental influences resulting from the rise of fund managers. Copyright Blackwell Publishing Ltd 2005.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The World Economy.

Volume (Year): 28 (2005)
Issue (Month): 4 (04)
Pages: 519-540

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Handle: RePEc:bla:worlde:v:28:y:2005:i:4:p:519-540

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Citations

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Cited by:
  1. Stephan Schulmeister, 2008. "Profitability of Technical Stock Trading: Has it Moved from Daily to Intraday Data?," WIFO Working Papers, WIFO 323, WIFO.
  2. Stephan Schulmeister, 2007. "The Interaction Between the Aggregate Behaviour of Technical Trading Systems and Stock Price Dynamics," WIFO Working Papers, WIFO 290, WIFO.
  3. Lukas Menkhoff, 2013. "Foreign Exchange Intervention in Emerging Markets: A Survey of Empirical Studies," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 36(9), pages 1187-1208, 09.
  4. Stephan Schulmeister, 2005. "The Interaction between Technical Currency Trading and Exchange Rate Fluctuations," Finance, EconWPA 0512033, EconWPA.
  5. Stephan Schulmeister, 2008. "Aggregate Trading Behaviour of Technical Models and the Yen-Dollar Exchange Rate 1976-2007," WIFO Working Papers, WIFO 324, WIFO.
  6. Sawischlewski, Katja & Menkhoff, Lukas & Beckmann, Daniela, 2005. "Robust Lessons about Practical Early Warning Systems," Proceedings of the German Development Economics Conference, Kiel 2005 3, Verein für Socialpolitik, Research Committee Development Economics.
  7. Lukas Menkhoff, 2010. "High-Frequency Analysis Of Foreign Exchange Interventions: What Do We Learn?," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 24(1), pages 85-112, 02.
  8. Fischer, Andreas M. & Isakova, Gulzina & Termechikov, Ulanbek, 2009. "Do FX traders in Bishkek have similar perceptions to their London colleagues?: Survey evidence of market practitioners' views," Journal of Asian Economics, Elsevier, Elsevier, vol. 20(2), pages 98-109, March.
  9. Stephan Schulmeister, 2007. "Performance of Technical Trading Systems in the Yen/Dollar Market," WIFO Working Papers, WIFO 291, WIFO.
  10. Thomas Gehrig & Lukas Menkhoff, 2006. "Extended evidence on the use of technical analysis in foreign exchange," International Journal of Finance & Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 11(4), pages 327-338.

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