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External Balance Sheets and the COVID-19 Crisis()
At the onset of the COVID-19 economic crisis, as in other crisis episodes, we observed a rapid appreciation of “safe haven” currencies. We quantify currency-induced balance sheet valuation effects for aggregate external positions as well as for broadly defined asset classes for the first quarter and...
Autores principales: | , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
The Author(s). Published by Elsevier B.V.
2023
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Materias: | |
Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9170281/ https://www.ncbi.nlm.nih.gov/pubmed/35693949 http://dx.doi.org/10.1016/j.jbankfin.2022.106570 |
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author | Hale, Galina Juvenal, Luciana |
author_facet | Hale, Galina Juvenal, Luciana |
author_sort | Hale, Galina |
collection | PubMed |
description | At the onset of the COVID-19 economic crisis, as in other crisis episodes, we observed a rapid appreciation of “safe haven” currencies. We quantify currency-induced balance sheet valuation effects for aggregate external positions as well as for broadly defined asset classes for the first quarter and the full year 2020. To do so, we use new data on the currency composition of cross-border assets and liabilities for 46 countries. In contrast with past financial crises, many emerging markets did not experience losses on their aggregate external balance sheets despite facing a domestic currency depreciation. This was partly due to currency-induced valuation gains on equity positions offsetting losses on debt positions, and partly due to reduced currency mismatch on their external debt positions. We conduct the stock-flow reconciliation of net international investment positions to measure overall valuation effects and compute the proportion that is due to changes in currency values. For about half of the countries in our sample, currency-induced valuation effects were substantial, representing over 50 percent of total valuation effects in 2020Q1 and the full year 2020. |
format | Online Article Text |
id | pubmed-9170281 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2023 |
publisher | The Author(s). Published by Elsevier B.V. |
record_format | MEDLINE/PubMed |
spelling | pubmed-91702812022-06-07 External Balance Sheets and the COVID-19 Crisis() Hale, Galina Juvenal, Luciana J Bank Financ Article At the onset of the COVID-19 economic crisis, as in other crisis episodes, we observed a rapid appreciation of “safe haven” currencies. We quantify currency-induced balance sheet valuation effects for aggregate external positions as well as for broadly defined asset classes for the first quarter and the full year 2020. To do so, we use new data on the currency composition of cross-border assets and liabilities for 46 countries. In contrast with past financial crises, many emerging markets did not experience losses on their aggregate external balance sheets despite facing a domestic currency depreciation. This was partly due to currency-induced valuation gains on equity positions offsetting losses on debt positions, and partly due to reduced currency mismatch on their external debt positions. We conduct the stock-flow reconciliation of net international investment positions to measure overall valuation effects and compute the proportion that is due to changes in currency values. For about half of the countries in our sample, currency-induced valuation effects were substantial, representing over 50 percent of total valuation effects in 2020Q1 and the full year 2020. The Author(s). Published by Elsevier B.V. 2023-02 2022-06-06 /pmc/articles/PMC9170281/ /pubmed/35693949 http://dx.doi.org/10.1016/j.jbankfin.2022.106570 Text en © 2022 The Author(s) Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active. |
spellingShingle | Article Hale, Galina Juvenal, Luciana External Balance Sheets and the COVID-19 Crisis() |
title | External Balance Sheets and the COVID-19 Crisis() |
title_full | External Balance Sheets and the COVID-19 Crisis() |
title_fullStr | External Balance Sheets and the COVID-19 Crisis() |
title_full_unstemmed | External Balance Sheets and the COVID-19 Crisis() |
title_short | External Balance Sheets and the COVID-19 Crisis() |
title_sort | external balance sheets and the covid-19 crisis() |
topic | Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9170281/ https://www.ncbi.nlm.nih.gov/pubmed/35693949 http://dx.doi.org/10.1016/j.jbankfin.2022.106570 |
work_keys_str_mv | AT halegalina externalbalancesheetsandthecovid19crisis AT juvenalluciana externalbalancesheetsandthecovid19crisis |