The Currency Composition of Asia’s International Investments

Paulo Rodelio Halili and Rogelio Mercado

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: This paper examines the importance of trade ties, macro-financial volatilities, and US dollar trade invoicing in explaining Asia’s international investment assets and liabilities denominated in world currencies, including the US dollar (USD), euro (EUR), pound sterling (GBP), Japanese yen (JPY) and Chinese yuan (CNY). The results show heterogeneous patterns of relevant covariates across different currencies. More importantly, the estimates offer evidence that the region hedges its currency risk by investing in US dollar denominated assets as greater US dollar trade invoicing significantly covaries with greater debt asset holdings denominated in US dollar.

Keywords: Currency composition; international investment assets and liabilities; trade invoicing; bilateral trade; macro-financial volatilities (search for similar items in EconPapers)
JEL-codes: F31 F36 F41 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2023-01
New Economics Papers: this item is included in nep-ifn, nep-opm and nep-sea
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https://cama.crawford.anu.edu.au/sites/default/fil ... 3_halili_mercado.pdf (application/pdf)

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Working Paper: The Currency Composition of Asia’s International Investments (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2023-06

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