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.