Exchange Rates and Capital Flows
Abstract"This paper explores the ability of portfolio and foreign direct investment flows to track movements in the euro and the yen against the dollar. Net portfolio flows from the euro area into US stocks - possibly reflecting differences in expected productivity growth - track movements in the euro against the dollar closely. Net FDI flows, which capture the recent burst in cross-border M&A activity, appear less important in tracking movements in the euro-dollar rate, possibly because many M&A transactions consist of share swaps. Movements in the yen versus the dollar remain more closely tied to conventional variables such as the current account and interest differential." Copyright Blackwell Publishers Ltd, 2004.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 01/190.
Date of creation: 01 Dec 2001
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