Research Briefing: A new tool for managing currency risk
What it is
In contrast to other asset classes, few tools exist to help investors, asset managers, corporates and banks to monitor and manage their diverse foreign exchange risks in a systematic way. Oxford Economics' FX Risk Tool fills this gap.
The FX Risk Tool is a composite measure of vulnerability to a currency crisis that builds on the literature of early warning indicators (EWI) of financial crises (including sovereign, currency and banking crises).
The FX Risk Tool helps analysts to assess the value at risk of their exposures and it can offer added value in managing carry strategies.