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We use a 2018 survey of FX margin traders in Japan to investigate which key factors influence their trading performance: socio-demographic and economic situation, investment strategy and trading behaviour, and/or financial literacy. We study this question using general-to-specific modelling and impulse-indicator saturation. First, the data show that variables from all three groups are significant predictors of traders’ performance. Second, we find that older traders and those without a specific trading strategy demonstrate lower performance. Performance is higher for those who trade greater amounts, rely more on fundamental analysis, and report having profitable FX trade skills. Third, respondents’ subjectively stated claim of having FX trade skills is based on a more advanced understanding of FX trading and a reliance on professional advice. Neither objective financial knowledge nor over/underconfidence play a noteworthy role in the performance of margin traders.

The study investigated the moderating effect of foreign exchange (FX) on ownership heterogeneity and the return on assets (ROA) of listed industrial goods firms in Nigeria. An ex-post facto research design was adopted to study the 13 industrial goods firms listed on the Nigeria Group Exchange (NGX) as at December 31, 2023. The multiple linear regression model as a tool for analysis was applied. The major results indicate that managerial ownership has a statistically significant and positive effect on ROA, hence evidence for agency theory’ which argues that the interests of managers should be in line with enhancing shareholder value. The interaction term MOFX, however, is significant and negative, meaning foreign exchange fluctuations reduce the positive effect of managerial ownership. On the other hand, IOFX is significantly positive and implies that institutional investors reduce FX-related risk and enhance performance. The study recommends that Managerial ownership should align management interests with firm performance and thus acts as an incentive to strengthen foreign exchange risk management. This commitment towards governance ensures stability, where institutional investors are attracted to companies that practice disciplined risk-taking, eventually contributing to the firm’s ability to withstand the impact of foreign exchange volatility.

A key issue in creating a new currency union is setting the rates to convert national currencies into the new union currency. Planned unions in the Gulf region and Africa are seeking methods to set the conversion rates when their new currencies are created. We propose a forward-looking econometric methodology to determine conversion rates by calculating the degree of misalignment in the real exchange rate, and apply it to the GCC currency union. For each GCC currency, we identify the year at which the economy is the closest to its internal and external equilibrium, and then estimate the degree of misalignment in the bilateral real exchange rate vis-à-vis the U.S. dollar based on WEO forecasts until 2013. Application of the methodology to other regions is also considered.

This paper examines the relationship between stock prices and exchange rates for the ASEAN5 plus the Big3. While previous studies have assumed a symmetric relationship between stock prices and exchange rates, this paper introduces nonlinearity in the relationship between the two variables. The empirical model used is the nonlinear autoregressive distributed lag (NARDL) model, which introduces nonlinearity by differentiating between the increases and decreases in the independent variable. The results show that although both the linear ARDL model and the NARDL model suggest that the relationship between the variables is mainly short-term, the NARDL model produces relatively more evidence supporting asymmetric long-run relationship between stock prices and exchange rates.

According to the development approach to exchange rates, competitive currencies have been a key factor in most East and Southeast Asian successful growth strategies. There is also today an important empirical literature that relates overvaluations to low per capita growth rates. While the econometric literature on this issue is relatively rich, theoretical analysis of channels through which real exchange rate levels could affect economic development are very scarce. This paper intends to contribute to the debate by bringing more theoretical elements and providing new econometric evidence to the connections between real exchange rate levels and development.