Abstract

https://ssrn.com/abstract=2735841
 


 



The Effect of Political Risk on Currency Carry Trades


Vitaly Orlov


University of Vaasa, Department of Accounting and Finance, Students

Nebojsa Dimic


University of Vaasa, Department of Accounting and Finance, Students

Vanja Piljak


University of Vaasa - Department of Accounting and Finance

2016


Abstract:     
This paper explores the risk profile of individual currency carry trades. Findings indicate that carry trade profitability depends on a country’s political risk, supporting the risk-based view on forward bias. Political risk effect originates as a component of government actions and is more pronounced in emerging economies and in countries with high interest differentials.

Number of Pages in PDF File: 10

Keywords: Political Risk, Carry Trades, Forward Premium Puzzle

JEL Classification: F31, G15


Open PDF in Browser Download This Paper

Date posted: February 23, 2016  

Suggested Citation

Orlov, Vitaly and Dimic, Nebojsa and Piljak, Vanja, The Effect of Political Risk on Currency Carry Trades (2016). Available at SSRN: https://ssrn.com/abstract=2735841 or http://dx.doi.org/10.2139/ssrn.2735841

Contact Information

Vitaly Orlov (Contact Author)
University of Vaasa, Department of Accounting and Finance, Students ( email )
Finland
HOME PAGE: http://www.uva.fi/en/profile/?view=1143608
Nebojsa Dimic
University of Vaasa, Department of Accounting and Finance, Students ( email )
Finland
Vanja Piljak
University of Vaasa - Department of Accounting and Finance ( email )
P.O. Box 700
FIN-65101 Vaasa, FI-65101
Finland
Feedback to SSRN


Paper statistics
Abstract Views: 293
Downloads: 74
Download Rank: 253,492