Lower-interest-rate currencies tend to depreciate relative to higher-interest-rate currencies. This observation is inconsistent with a popular theory, uncovered interest parity (UIP). According to market participants' views, this is caused by the carry-trade activities in a low-volatility...

An analysis of mutual-fund-level flow data into EM bond and equity markets confirms that different types of funds behave differently. Bond funds are more sensitive to global factors and engage more in return chasing than equity funds. Flows from retail, open-end, and offshore funds are more...