Machine Learning

Outflows are caused by interest rate differentials and exchange rate changes As foreign currencies weaken against the dollar, foreign interest rates become more attractive and foreign securities become cheaper When the foreign currency strengthens, interest rates and bond prices fall This is also true for bond investors in the U S If they see the dollar strengthening, they increase their purchases of foreign securities for sale in their countrys currency When interest rates and yields in the U increase, investors in the U have less incentive to invest in foreign securities and vice versa There are also the relative returns on bond investments An investor in the U may have a higher return on bonds of a domestic corporation than on government bonds of a foreign country This is due to the fact that a diversified portfolio of corporate bonds may have a higher return than an equal-dollar amount of foreign bonds of a diversified portfolio The investor must compare the difference in the risk of the two b