comprehensive estimate of foreign investors' U.S. dollar (USD) security holdings and currency hedging practices. We document four … raised their USD hedge ratio by an average of 15 percentage points, despite higher hedging costs implied by large and … persistent deviations from covered interest-rate parity. The total FX hedging demand from these sector reached $2 trillion in …

-financial-crisis regulatory environment. Global banks mainly use such funding to finance liquid, near risk-free arbitrage positions--in particular …, the interest on excess reserves arbitrage and the covered interest rate parity arbitrage. In this environment, we examine … global banks to the reform was a cutback in arbitrage positions that relied on unsecured funding, rather than a reduction in …

Recent theories of exchange rate determination have emphasized limited UIP arbitrage by international financial … institutions. New regulations since 2008 have also lead to imperfect CIP arbitrage. We show that under limited CIP arbitrage the … operate through the swap market, which have no effect under perfect CIP arbitrage. More familiar financial shocks that impact …