Abstract
This study attempts to establish the determinants of foreigners' holdings of U.S. dollars. Based upon a transactions demand model and a portfolio selection model, private nonbank foreigners' holdings of short-term U.S. dollar assets, both in the Eurodollar market and in the United States, are analyzed. The most significant empirical finding is that trade is consistently of major importance in explaining quantities of dollars held. Heretofore, dollars held in the Eurodollar market have largely been considered portfolio choices selected on the basis of relative risks and returns. This study indicates, however, that even dollars held in the Eurodollar market are affected more by volume of dollar trade than by any other explanatory variable.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
