Is currency hedging necessary for emerging-market equity investment?

Daehwan Kim

Economics Letters, 2012, vol. 116, issue 1, 67-71

Abstract: When a developed-market investor buys emerging-market stocks, this investor may be justified not to hedge currency risk. Our analysis indicates that completely unhedged portfolios often perform better than fully hedged portfolios and are not significantly inferior to optimally hedged portfolios. We provide a carry-profit-based explanation of this finding.

Keywords: Currency hedging; Emerging market; Carry profit (search for similar items in EconPapers)
JEL-codes: F31 G11 G15 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:116:y:2012:i:1:p:67-71

DOI: 10.1016/j.econlet.2012.01.008

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