Are international fund flows related to exchange rate dynamics?

Suxiao Li*, Jakob de Haan, Bert Scholtens

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

1 Citation (Scopus)
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Abstract

Employing monthly data for 53 countries between 1996 and 2015, we investigate the relationship between international fund flows and exchange rate dynamics. We find strong co-movement between funds flows (as measured with the EPFR Global data base) and bilateral real exchange rates vis-à-vis the USD. This holds both for equity flows and bond flows. However, bond flows have a more significant relationship with RER appreciation than equity flows in developing countries, while in developed countries equity flows play a more important role. Under a more flexible exchange rate regime the real exchange rate appreciation associated with fund flows is higher.
Original languageEnglish
Pages (from-to)31-48
Number of pages18
JournalOpen Economies Review
Volume29
Issue number1
Early online date19-Oct-2017
DOIs
Publication statusPublished - Feb-2018

Keywords

  • international fund flows
  • exchange rate regime
  • exchange rate
  • dynamic panel model
  • CAPITAL FLOWS
  • LATIN-AMERICA
  • PANEL-DATA
  • INFLOWS

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