Foreign investors and crises: There is no safe haven for all seasons

Maurizio Michael Habib, Livio Stracca 28 February 2014

a

A

The resilience of the international status of the US dollar remains surprising (Frankel 2013). At the peak of the global financial crisis which started in the US, in particular in the last quarter of 2008, US treasury yields fell and the US dollar appreciated. This has created the impression of a stronger demand for US securities in general. The evidence suggests, however, that non-US residents were instead relatively ‘picky’, fleeing into short-term US Treasury bills but reducing purchases of longer-dated Treasury bonds and shedding other US bonds.

a

A

Topics:  Financial markets Global crisis

Tags:  US, reserve currency, financial crisis, asset pricing, global crisis, risk aversion, home bias, safe haven, portfolio flows