We develop a simple model of the exchange rate in which agents optimize their portfolio and use different forecasting rules. They check the profitability of these rules ex post and select the more profitable one. This model produces two kinds of equilibria, a fundamental and a bubble one. In a...

We develop a simple model of the exchange rate in which agents optimize their portfolio and use different forecasting rules. They check the profitability of these rules ex post and select the more profitable one. This model produces two kinds of equilibria, a fundamental and a bubble one. In a...

We hypothesized that sharp movement in the USDX, GBP/USD, and USD/CNY might result in stock market fluctuations owing to heightened investors’ sentiments. The subsequent performance of trading stocks right after such sharp movements in exchange rates is seldom explored in existing studies. We...