Determinants of carry trades in Central and Eastern Europe
The article shows that carry trades to Central and Eastern Europe (CEE) were lucrative during the boom period 2004--2006 when interest rate spreads between the funding and investment currencies were high. In contrast, when liquidity risk and exchange rate volatility increased after 2007, carry trades were unprofitable. The analysis further suggests that there is a link between the exchange rate regime and carry trade returns. Overall, exchange rate stabilization, particularly via managed floats, seems to go along with the highest profit opportunities.
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Volume (Year): 22 (2012)
Issue (Month): 18 (September)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"A Vicious Cycle of Manias, Crashes and Asymmetric Policy Responses - An Overinvestment View,"
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