We assess the properties of currency value strategies based on real exchange rates in a cross-sectional portfolio … setting. We find that real exchange rates predict currency excess returns, but in a way that is inconsistent with the notion … of currency value because a high valuation level forecasts a relative appreciation of the foreign currency going forward …

We assess the properties of currency value strategies based on real exchange rates in a cross-sectional portfolio … setting. We find that real exchange rates predict currency excess returns, but in a way that is inconsistent with the notion … of currency value because a high valuation level forecasts a relative appreciation of the foreign currency going forward …

to economic activity. We find, first, that the Chinese currency, the renminbi (RMB), is substantially below the value … manufacturing capital stock is accounted for. Thus, the China-US trade balance should respond to real exchange rate and relative …