We offer a unifying empirical model of covered and uncovered currency premia, interest rates and spot and forward exchange rates, both in the cross section and time series of currencies. We find that ...

Discover how central banks manage currency values through dirty floats, stabilizing economies by intervening in exchange rates to mitigate economic shocks.

Using tools like forwards and options, currency-neutral funds hedge foreign-exchange risks. Investing in currency-neutral funds can protect against losses from unfavorable exchange-rate shifts.