Outward portfolio investment and dollar funding in emerging Asia

Patrick McGuire, Ilhyock Shim, Hyun Song Shin and Vladyslav Sushko

BIS Quarterly Review, 2021

Abstract: The growing heft of institutional investors and asset managers in several Asian economies has fuelled expansion in outward portfolio investment, mainly in US dollar-denominated assets. This investment is predominantly in long-term instruments but is hedged for currency risk mainly through short-term derivatives. The rollover risk in currency hedges exposes these non-bank investors to stress in dollar funding markets, as occurred in March 2020. Some Asian economies have since strengthened regulatory frameworks to address dollar funding-related vulnerabilities of resident institutional investors and asset managers

JEL-codes: F21 F34 G15 G23 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (7)

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