Managing mismatches
As the world economy deals with the continuing credit crunch, and as capital flows shrink, gauging currency valuations becomes even more important for investors. The best approach is to use a variety of methods to look for valuation mismatches, such as the Fundamental Equilibrium Exchange Rate (FEER) approach for emerging markets (EM) currencies and the Behavioural Equilibrium Exchange Rate (BEER) models on an ad hoc basis. Here, we introduce a third metric based on each country's net foreign
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