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The Exposure of Long-Term Foreign Currency Bonds

Michael Adler, Bernard Dumas

Journal of Financial and Quantitative Analysis · 1980 · Volume 15 · Issue 4

DOI: 10.2307/2330573

Abstract

A currency is not risky because devaluation is highly likely. If the devaluation were certain, there would be no risk at all. A weak currency can be less risky than a strong currency. A strong currency does not become risky because it has been used to denominate a firm's debt.

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