Hydrogen-deuterium exchange (HDX) measurements are widely used to probe protein structural dynamics. Quantitative interpretation of HDX data relies on the concept of an intrinsic exchange rate, which is well characterized in isotopically pure H2O or D2O but does not explicitly account for the back exchange that necessarily occurs in H2O/D2O mixtures: in this case, both the approach-to-equilibrium rate and the equilibrium deuterium enrichment of amides depend nontrivially on solvent composition and acidity. A practical method is presented to predict intrinsic forward and reverse amide exchange rates in H2O/D2O mixtures. The approach combines known second-order reference rates measured in pure solvents with established empirical descriptions of H2O/D2O mixtures. The resulting framework yields explicit expressions for forward and back exchange rates as functions of solvent composition and acidity and correctly recovers the known limits in pure H2O and pure D2O. The model predicts composition-dependent kinetic isotope effects and an equilibrium amide fractionation factor of ϕ = 1.20 for unstructured peptides under base-catalyzed conditions, in close agreement with the experimental value 1.22 reported for poly-d,l-alanine. By providing a physically motivated description of exchange in mixed solvents, this method offers a practical starting point for quantitatively correcting back exchange in HDX-MS and HDX-NMR experiments.

Abstract: In simple terms, the exchange rate represents the value of one nation’s currency in relation to another. It determines how much of one currency be exchanged for another and plays a crucial role in international trade and finance. Often referred to as the foreign exchange rate or forex rate, it influences economic stability, trade competitiveness, and investment flows between countries. Exchange rates are determined in the forex market, a global marketplace where various participants engage in continuous currency trading, operating 24 hours a day except on weekends. The spot exchange rate represents the current value at which currencies are exchanged. In contrast, the forward exchange rate is an agreed-upon rate set today for a transaction that will be executed on a future date. In both developed and developing nations, various stakeholders such as foreign exchange investors, exporters, importers, banks, businesses, financial institutions, and travelers base their decisions on exchange rate fluctuations. Changes in exchange rates affect the value of international reserves, influence the competitiveness of exports and imports, determines the cost of repaying foreign debts, and impact travel expenses by altering the purchasing power of a currency. Therefore, fluctuations in exchange rates greatly influence the business cycle, trade dynamics, and capital movements within an economy. Understanding these changes is vital for analyzing financial trends and evaluating shifts in economic policy.

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 the rich empirical patterns are in line with a partial equilibrium model of the currency market, where hedged and unhedged currency is supplied by intermediary banks subject to value-at-risk balance-sheet constraints, emphasizing the frictional nature of equilibrium currency premia and exchange rate dynamics. In the cross section, the excess supply of local-currency savings is the key determinant of low relative interest rates, negative covered and uncovered currency premia, cheap forward dollars; and vice versa. In the time series, covered currency premia change infrequently and in concert across currencies, driven by aggregate financial market conditions. In contrast, uncovered currency premia move frequently in response to currency-specific demand shocks, which we capture with the dynamics of net currency futures positions of dealer banks. Sharp exchange rate depreciations in response to negative shifts in currency demand are followed by small persistent predictable appreciations that generate future positive expected currency returns necessary to ensure intermediation of currency demand shocks, irrespective of their financial or macroeconomic origin. Changes in net futures positions of dealer banks account for most of the variation in the spot exchange rate for every currency.

The purpose of this research is to examine the bidirectional relationship between the non-deliverable forward (NDF) exchange rates of the US dollar against the Egyptian pound (USD/EGP) and the Egyptian stock market, proxied by the EGX30 index. It also examines the asymmetry of the effects of positive and negative shocks in each market on the conditional volatility of returns in the other market over the period from November 2016 to July 2024 mainly based on daily data. The Asymmetric BEKK-GARCH model is employed to achieve the purpose of research. A significant bidirectional relationship between the forward USD/EGP exchange rate market and the Egyptian stock market is documented, with asymmetrical effects of positive and negative at least from the Egyptian stock market to forward exchange rate market. These results are still robust after using different model specifications, considering structural breaks, and employing different NDF maturity dates. In addition, an evidence of significant volatility spillover is found from the forward exchange rate market to the Egyptian stock market when real exchange rates are used instead of nominal ones using monthly data. The findings of this study are useful for portfolio managers, prospective investors, and policymakers, and several ideas for future research are suggested. الغرض من هذا البحث هو دراسة العلاقة التبادلية بين أسعار الصرف الآجلة غير القابلة للتسليم للدولار الأمريكي مقابل الجنيه المصري وسوق الأسهم المصري، ممثلة بمؤشر EGX30. كما يفحص البحث عدم التماثل في تأثير الصدمات الإيجابية والسلبية في كل من السوقين على التقلبات الشرطية للعوائد في السوق الآخر خلال الفترة من نوفمبر 2016 إلى يوليو 2024، وذلك بالاعتماد بشكل أساسي على البيانات اليومية. يتم استخدام نموذج Asymmetric BEKK-GARCH لتحقيق هدف البحث. وتوصلت الدراسة إلى وجود علاقة ثنائية الاتجاه ذات دلالة إحصائية بين سوق العقود الآجلة غير القابلة للتسليم لسعر الصرف (USD/EGP) وسوق الأسهم المصري، مع تأثيرات غير متماثلة للصدمات الإيجابية والسلبية، على الأقل من سوق الأسهم المصري إلى سوق العقود الآجلة للصرف. وتظل هذه النتائج قوية حتى بعد استخدام نماذج مختلفة، وأخذ الانكسارات الهيكلية في الاعتبار، واختبار تواريخ استحقاق مختلفة للعقود الآجلة غير القابلة للتسليم. بالإضافة إلى ذلك، تم التوصل لدليل على انتقال كبير للتقلبات من سوق العقود الآجلة لسعر الصرف إلى سوق الأسهم المصري عند استخدام أسعار الصرف الحقيقية بدلاً من الاسمية، وذلك بالاعتماد على البيانات الشهرية. وتوفر نتائج هذه الدراسة معلومات قيمة لمديري المحافظ الاستثمارية والمستثمرين المحتملين وصناع السياسات، كما تطرح عدة أفكار للأبحاث المستقبلية.

This paper examines and compares the trading strategies of carry and covered interest arbitrage. This study constructs portfolios for G10 countries based on interest rates’ spot and forward exchange rates. We extend the prior literature by focusing on the profitability of the strategies during and around the two crisis periods, comparing both carry trade (CT), i.e., unhedged, and covered interest arbitrage (CIAT), i.e., hedged. We find that both CT and CIAT have variable profits during the period examined, with both strategies’ profits generally concentrated in the pre-crisis period and most losses in the post-crisis period.

This study examines the short- and long-term effects of multiple quantiles of forward exchange rate premiums (FERPs) and COVID-19 cases on the quantiles of stock market returns (SMRs). We extend the Quantile Autoregressive Distributive Lag (QARDL) model, and the Multiple Threshold Non-linear Autoregressive Distributive Lag (NARDL) model propose a new Multiple Threshold Quantile Autoregressive Distributive Lag (MT-QARDL) approach. Unlike MT-NARDL, QARDL, and NARDL, the MT-QARDL model, which integrates the MT-NARDL model and the quantile regression methodology, captures both short- and long-term locational and sign-based asymmetries. For instance, at lower quantiles for Indian and Sri Lankan SMRs, bearish FERP exerts a positive influence, while bullish FERP has a negative effect during COVID-19. Conversely, bullish FERP negatively affects lower quantiles of SMRs of Bangladesh, India, and Sri Lanka, whereas bearish FERP either yields an opposite effect or remain statistically insignificant during COVID-19. The findings underscore long-term sign-based asymmetries due to the differential bearish and bullish FERP impact during COVID-19. However, in the long term, location-based asymmetries also existed as bullish FERP negative influence the SMRs of India, Bangladesh and Sri Lanka at higher quantiles but SMRs at lower quantiles insignificantly respond to the bullish FERP fluctuations during COVID-19.

Abstract We propose the currency hedging channel that connects countries’ external imbalances to their exchange rate behavior. We present a model in which investors increase their currency hedging during periods of financial distress in proportion to their net foreign asset exposure. This behavior coupled with constrained financial intermediation explains observed relationships between gradually adjusting external imbalances and volatile spot and forward exchange rates. We find empirical support for the hedging channel in both the conditional and unconditional moments of exchange rates, option prices, and countries’ uses of Federal Reserve swap lines.

This paper explores the foreign exchange risk encountered by Amazon.com Inc. and proposes corresponding futures hedging strategies. With global market uncertainties, foreign exchange risk significantly impacts the financial performance of multinational companies like Amazon. The paper analyzes Amazon's foreign exchange risk factors, highlighting that the primary risks stem from international business revenues and holdings of foreign currency cash equivalents and marketable securities. Based on these risk factors, the study proposes several potential hedging strategies, including forward market hedging, futures hedging, and exchange rate options hedging. Forward market hedging mitigates risk by agreeing to exchange currencies at a predetermined rate in the future; futures hedging avoids counterparty default risk through standardized contracts; and exchange rate options hedging offers flexibility by allowing the exercise to be abandoned if the exchange rate moves favorably. The paper further develops a specific futures hedging strategy based on several key assumptions, including efficient market hypothesis, zero transaction costs, unlimited liquidity, and the absence of risk-free arbitrage opportunities. The strategy involves shorting futures contracts; if the exchange rate declines at maturity, the hedge is successful and profitable; if the exchange rate rises, the hedge is unsuccessful, resulting in a loss. The findings suggest that using futures contracts for hedging enables Amazon to stabilize its financial performance in case of market uncertainties, protecting it from adverse impacts of foreign exchange risk. Despite discrepancies between actual sales data and forecasts, the hedging strategy still demonstrates its effectiveness in maintaining financial stability.

In the in-situ leaching method of ionic rare earth, ion exchange reaction between rare earth ions and leaching agent ions is carried out, which allows the rare earth ions to be leached from the ore body as the leaching solution flows through the pores. This indicates that the leaching process of rare earth ions is closely related to the seepage field, ion exchange field, and ion migration process of the leaching solution. In this study, an ionic rare earth mine located in Longnan of Jiangxi Province was taken as the research object. By conducting nuclear magnetic resonance scanning on the ore samples of this mine and vectorizing the nuclear magnetic resonance images, a two-dimensional geometric model of pores was obtained. Then, COMSOL Multiphysics software was used to establish a coupled numerical model of seepage–exchange–migration of the ionic rare earth mine during the leaching process at the pore scale to study the seepage situation of leaching solution with different injection strengths and concentrations, as well as the exchange and migration process. The results show that increasing the concentration of magnesium ions can increase the difference of ion diffusion concentration, accelerate the forward exchange rate of ions, promote the forward exchange reaction, and improve the concentration gradient of rare earth ions in the leaching solution. The more significant the diffusion effect, the higher the ion migration rate, while at the same time inhibiting the reverse adsorption of rare earth ions, and accelerating the leaching efficiency of rare earth ions. In addition, increasing the strength of the injection solution allows rare earth ions to leach out of the ore body earlier, shortens the leaching cycle, and thus reduces the peak concentration of leached rare earth ions. By analyzing the effects of the strength of the injection solution and leaching concentration on ionic rare earth leaching, the influence of those two factors on engineering economy can be briefly evaluated, which can be provided as a reference for the optimization of ionic rare earth mining technology.

We provide evidence that the delayed overshooting puzzle reflects a slow adjustment of exchange rate expectations to monetary policy shocks rather than a failure of uncovered interest parity. Consistent with this evidence, we put forward a New Keynesian model in which uncovered interest parity holds, but there are information rigidities: investors do not observe monetary policy shocks but learn rationally from unanticipated shifts in monetary policy about the state of the economy. We estimate the model and find it can account for the joint responses of the spot exchange rate, forward exchange rates, and excess currency returns to monetary policy shocks. (JEL D83, E12, E31, E43, E52, F31)

NDFs are over-the-counter traded foreign exchange derivative products. The settlement of an NDF contract does not involve the delivery of the underlying currency pair. Instead, it involves a net payment in a convertible currency (usually the US dollar), which is proportional to the difference between the agreed forward exchange rate and the subsequently realized spot fixing. Hong Kong's geopolitical location as an outlet that connects mainland China to the world gives it an essential role in researching CNY's international features Hong Kong's trading market serves as a crucial link for the expansion of RMB usage, with the resulting shifts in positions supporting the interpretation of the role of RMB in the process of globalization of the currency, as well as the interpretation of financial markets. This study examines how the Hong Kong market serves as a critical hub for the currency's global integration through its trading of RMB, and focuses on the interplay between market regulations, economic policies, and the intricate balance of supply and demand affecting deliverable (CNY and CNH) and non-deliverable forward (NDF) contracts. The research findings reveal that the examination of transaction data from Hong Kong's commodity exchange demonstrates a complicated interconnection between deliverable (CNY and CNH) and non-deliverable forward (NDF) contracts. This intricate relationship highlights the Chinese Yuan's (RMB) fluctuating role in the market, influenced by factors such as market sentiment, regulatory changes, and economic conditions. In essence, the RMB's trading volumes and value in this setting reflect its sensitivity to both domestic and international market shifts.

This paper employs the vector error correction model (VECM) to measure the contribution of the onshore renminbi spot foreign exchange (CNY) rate to the price discovery of the offshore one (CNH). The VECM incorporates the covered interest rate parity condition by introducing the forward swap rate. Each rate has onshore and offshore markets, and the VECM encompasses the seven variables. This rich VECM challenges the small VECM with only two CNH and CNY rates, revealing an overstatement of the CNH's contribution. Additionally, CNY and CNH are the main contributors to the price discovery of the forward exchange rates. When the central parity is set to be weaker than the previous day's closing of the CNY, the CNY is dominant over the CNH in terms of the information share in the spot FX rate. This effect is amplified after the month of sluggish Chinese exports.

This study explores the viability of the PPP (Purchasing Power Parity) theory in predicting short-term exchange rate movements in Bangladesh. We aim to construct a forecast model, exclusively based on PPP theory, to accurately estimate the 30, 60, and 90-day forward exchange rates of BDT-USD (Bangladeshi Taka - US Dollar) with minimal error. Drawing from approximately 9 years of monthly data, we utilize monthly nominal CPI values from Bangladesh and the USA to compute six inflation differentials across various periods (30, 60, 90, 120, 150, and 180 days). To determine the lagged impact of inflation on exchange rates, we employ a straightforward correlation matrix with associated p-values. Among these sets, the one exhibiting the highest correlation (along with the lowest p-value) with the percentage change in the 30-day forward rate is identified as the very variable having the highest impact on the next 30-day forward rate. This process is repeated for the 60 and 90-day forward rates, leading to three distinct equations for forecasting each duration. Finally, error-adjustment variables are incorporated in these equations. Our model relies on five readily available data points to forecast forward exchange rates. Results indicate that this model accurately forecasts the 30-day forward exchange rate with a ±0.58% error margin and 98.84% accuracy, with statistical robustness at a 5% significance level across the sample period. However, the performance diminishes when forecasting 60 and 90-day forward exchange rates. This study underscores the effectiveness of PPP theory in predicting up to 30 days of forward exchange rates in Bangladesh, highlighting its practical applicability in economics and finance.

Exchange rates and fundamentals: Forecasting with long maturity forward rates

Commercial banks are vital to the financial sector in any country more so in developing economies where capital markets are not well developed and strong. Commercial Banks’ profitability is important because the soundness of an industry is closely connected to soundness of the whole economy. Profitability of the banking sector is also central as the well-being of the industry is closely associated with the wellness of the whole economy in general. Thus, a proficient and productive banking sector is able and better placed to endure negative economic shocks. This study investigated the fundamental risk factors and profitability of Kenyan commercial banks. The study systematically reviewed past studies undertaken on the area of interest. Attention was given on the study findings and the methodology. Conclusions on the relationship that exist between the variables were drawn for the study from the findings of the past studies. Recommendations were made based on the study findings and conclusions. price level fluctuation had a significant positive effect on profitability of commercial banks in Kenya based on return on assets and net interest margin while an insignificant positive effect on return on equity. Exchange rate fluctuation had a significant negative effect on profitability of commercial banks in Kenya based on return on assets and an insignificant negative effect based on return on equity and net interest margin. Interest rate fluctuation on profitability of commercial banks in Kenya. The study found that interest rate fluctuation had a significant positive effect on profitability (return on assets, return on equity and net interest margin) of commercial banks in Kenya. The study recommends that the managers of commercial banks in Kenya should always be in the know of the prevailing economic conditions of the country and that of other countries which they have operational branches. The study found that exchange rate fluctuation is a major predictor of profitability of commercial banks in Kenya (based on return on assets). As such, the managers of commercial banks can engage in foreign exchange hedging practices where the fixed forward exchange rates can be used. The effect of interest rate fluctuation on profitability of commercial banks in Kenya was found to be significant for all the three measures. The study therefore recommends that in periods of high demand for loans, bank managers can take advantage of such periods by charging higher interest rates on loans, however moderately.

Nigeria government has been playing the role of internalizing economic externalities, dealing with issue of unemployment and overall welfare of the populace. However, in the presence of huge and rising government expenditure, unemployment, and inflation rate still persist. This therefore called for a revisit of what determines government expenditure. There are three issues yet unresolved in the debate of what drives government expenditure. These are omitted variables bias, aggregation bias and asymmetry issue. To deal with aggregation bias, we focus on the components of government expenditure, that is, capital and recurrent. To address the issue of asymmetry, nonlinear autoregressive distributed lag was employed. Data are obtained for relevant variables spanning 1981–2021. Model of government expenditure developed by Peacock and Wiseman (1961) combined with Devarajan et al (1996) and Giavazzi, et al (2000) models are utilized. The following results are obtained. First, government capital expenditure is countercyclical while recurrent expenditure is procyclical. Second, some drivers of government expenditure, such as exchange rate and oil price, exhibit asymmetry behavior. Asymmetric tax revenue shows potential to drive capital expenditure but significantly and positively influences recurrent expenditure. Asymmetric behavior of oil revenue and exchange rate also engenders capital expenditure. However, asymmetric behavior of degree of openness and inflation rate negatively affects capital expenditure. Asymmetric behavior of tax revenue and oil revenue posted positive effect while exchange rate and degree of openness have negative effect on recurrent expenditure. Period of election is also a strong positive determinant of recurrent expenditure both in the short and long run. Following the nature of cyclicality of the component of government expenditure, the priority of government could be on capital expenditure since it will provide essential public goods required for the economy to flourish. Bearing in mind that oil revenue is volatile, it is imperative for government to rely more on tax revenue than oil revenue. Engaging in forward exchange rate might be appropriate to deal with any possible exchange rate fluctuation.

This paper is using the fundamental forecasting model, which is a monetarist theory of exchange rate determination, for the current forecasting. This theory is tested empirically by using data, spot and forward rates and a variety of macro-variables from seven different countries with respect the U.S., as our domestic country. A GARCH-M model is used to forecast the volatility of the spot exchange rate. The paper is also using a Vector Auto-regression (VAR) framework to forecast simultaneously spot (s_t) and forward (f_t) exchange rates by utilizing exogenous macro-variables, time trends, and policy instruments. Further, at the end an impulse response function and a Hodrick-Prescott filter are used to present visually the behavior of the spot exchange rate. The countries used in the empirical work are, U.S. with respect the Euro-zone, Mexico, Canada, U.K., Switzerland, Japan, and Australia. The results show that these methods are giving very good forecasting for these seven exchange rates by minimizing the standard error of the regression (SER) and the root mean squared error (RMSE). Of course, uncertainty exists always in the forecasting of any economic variables, due to unanticipated public policies (monetary, fiscal, and trade) and other “innovations” in our financial markets, plus the new philosophies (i.e., liberalism, lack of ethics, perversions, DEI, AI, wars, BRICS, etc.), official measurements, and value system in our markets, societies, and way of living.

The real interest parity (RIP) condition states that the interest rate differential between two economies is equivalent to the differential between the forward exchange rate and the spot exchange rate. This study examines the integration of financial markets in the GCC countries by verifying the validity of RIP in their economies. Using univariate and different panel unit root tests, we find evidence supporting the RIP theory, which indicates that the financial markets in these countries are well integrated and that the adoption of a common currency would be relatively easy. JEL classification: F21; F36; C23 Keywords: Real Interest Parity, GCC Countries, Panel Unit Root Tests, Monetary Union

The forward premium anomaly, which refers to the empirical failure of the uncovered interest parity (UIP), has been primarily examined by the forward premium regression of [Fama, E. (1984). Forward and spot exchange rates. Journal of Monetary Economics, 14(3), 319–338. https://doi.org/10.1016/0304-3932(84)90046-1]. Some studies apply the rolling-window regression to capture the time-varying coefficient on the forward premium, with difficulty in statistically testing the deviation of the coefficient from the UIP over time. We follow [Baillie, R., & Kim, K. (2015). Was it risk? Or was it fundamentals? Explaining excess currency returns with kernel smoothed regressions. Journal of Empirical Finance, 34, 99–111] to apply the simultaneous inference procedure to the Korean Won-US Dollar spot and forward exchange rates by estimating the time-varying coefficient from the kernel-smoothed local-linear regression and constructing the uniform confidence band to test the local deviation. We find that, while the UIP is not rejected from the baseline regression, the simultaneous inference shows that the deviation from the UIP is mainly observed during the early 2000s and 2010s. Time-variation of the forward premium coefficient tends to be significantly affected by economic uncertainties such as the interest rate, inflation, and stock return volatilities in Korea and US.

The imposition of restrictive trade policies and consequent fabrication of foreign trade statistics acts as hindrance for effective policy formulations in the developing countries. This article presents the trade misreporting scenario of Bangladesh in relation to major Asian trade partner countries (China, India and Singapore) between 1973 and 2018 and examines the possibilities of informal capital movements across borders. Using the vector autoregression (VAR) and autoregressive distributed lag (ARDL) models, we first build partner-level exercise, followed by a combined panel, and find that spot and forward exchange rates, custom duties and real interest rate differences between foreign and home largely affect trade misreporting rates. Interestingly, we also find that the values of past import under-invoicing might also lead to export under-invoicing and vice versa, a two-way causal relationship. JEL Codes: F14, F68, C10, C52