Currency

CFA Level III Portfolio Management
#1

One quick q:

When currency is appreciating, do yields go down or up?

THanks

#2

in relation to?

#3

You have to phase your questions in a better way, not way to answer without more specific.

#4

I’m thinking about the question regarding a pegged rate. If one expects the peg not to hold and thus currency value to depreciate the value of the bond in the foreign currency will be lower(asset is worth less thats denominated in a foreign currency thats expected to depreciate) so yield would be higher.

#5

If people lose confidence in the peg the pegging country will have to offer higher yields in order to keep their currency stable.

#6

Thanks guys. It’s a general q-and yes it’s from the item set where there is q about pegging of currency. Generally, I have seen questions stating that when inflation is high, currency depreciates and yield rise & vice versa. Somewhere I have seen it the other way around. Just wanted to clear my confusion about when yields go up ( dep) and when they go down (appre).

Thanks,