Which is the Safe Haven for Emerging Stock Markets, Gold or the US Dollar?

As other safe haven assets, safe haven currencies are sought by investors to mitigate financial risk when economic turbulence hits. Three major safe haven currencies are the US dollar (USD), the Japanese yen (JPY) and the Swiss franc (CHF). The euro is now in competition as an alternative safe haven currency. US dollar will remain the best safe haven currency in the short term and the best investment currency in the medium term. In every uncertainty of the US equity market as well as in the case of a decline of the US dollar, the investor may consider investing in a safe haven currency like the yen or the Swiss franc. Given the stability of Swiss government and financial system of the country, the increased foreign demand for the currency usually pushes the Swiss franc upward. There are number of factors, characterizing the dynamics in which the investors fall, rushing to the Japanese yen during periods of global risk aversion. Traders looked for refuge in the cryptocurrency because they cannot find refuge elsewhere.

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Can We Reckon Bitcoin as a Hedge, a Safe Haven or a Diversifier for US Dollars?

Global Business Review ◽

10.1177/0972150920968168 ◽

2020 ◽

pp. 097215092096816

Author(s):

Rym Regaieg ◽

Wajdi Moussa ◽

Nidhal Mgadmi

Keyword(s):

Markov Switching ◽

Ar Model ◽

Portfolio Risk ◽

Safe Haven ◽

The Us ◽

Research Findings ◽

Us Dollar ◽

Risk Managers

This article aims to analyse the hedging, diversifier and safe-haven properties of Bitcoin for the US Dollar Index (USDI). We explore the long-term relationship between USDI and Bitcoin by estimating a Markov-switching autoregressive (MS-AR) model with two regimes. Thus, the data used cover the period from 18 January 2010 to 30 June 2017 for both USDI and Bitcoin. The empirical findings based on the analysis of the MS-AR model report that investing in Bitcoin involves more benefits than USDI even if the economy is in a recession. However, by examining Bitcoin and USDI volatility, the research findings underline positive dependency between the two. Such results denote that Bitcoin does not act as a hedge, and not even as a safe haven, against USDI. We found that Bitcoin is merely a diversifier for USDI. Accordingly, the outcomes will help investors and portfolio risk managers to make more up-to-date investment analyses and decisions.

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Does Gold Act as a Hedge or a Safe Haven against Equity and Currency in Asia?

Global Business Review ◽

10.1177/0972150918803993 ◽

2018 ◽

Vol 20 (1) ◽

pp. 105-118 ◽

Cited By ~ 1

Author(s):

Muhammad Aftab ◽

Syed Zulfiqar Ali Shah ◽

Izlin Ismail

Keyword(s):

Financial Markets ◽

National Currency ◽

Currency Markets ◽

Safe Haven ◽

Conditional Correlation ◽

Dynamic Conditional Correlation ◽

The Us ◽

Us Dollar ◽

Managing Risk ◽

Autoregressive Conditional Heteroscedasticity

In recent years, uncertainty in financial markets has stimulated the need to explore alternative avenues for safeguarding wealth and managing risk. In this strand of research, gold has been particularly important due to its potential to mitigate risk and preserve wealth. This study investigates gold behaviour against equities and currencies in three regions across Asia. We follow Engle’s (2002) dynamic conditional correlation-multivariate generalized autoregressive conditional heteroscedasticity (DCC-MGARCH) model to test the gold link with equity and currency markets. We use a weekly series of exchange rate (national currency/the US dollar), equity and gold prices in national currency over the weekly period, 1995–2013. The sample consists of 12 countries covering East Asia, South Asia and Southeast Asia. Findings suggest that gold is just a diversifier against stocks in the Asian economies except in Korea, Singapore and Thailand. However, gold acts as a hedge and safe haven against Asian currencies—except China and Hong Kong—thus still preserving its monetary role.

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The Impact of US Dollar Index on Emerging Stock Markets: A Simultaneous Granger Causality and Rolling Correlation Analysis

Essays in Financial Economics - Research in Finance ◽

10.1108/s0196-382120190000035007 ◽

2019 ◽

pp. 145-154

Author(s):

Deniz Ilalan ◽

Burak Pirgaip

Keyword(s):

Correlation Analysis ◽

Granger Causality ◽

Stock Markets ◽

Emerging Stock Markets ◽

Us Dollar ◽

The Impact

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Międzynarodowe waluty safe haven – bezpieczna przystań w czasie kryzysu

Optimum Economic Studies ◽

10.15290/oes.2021.01.103.06 ◽

2021 ◽

pp. 80-90

Author(s):

Ireneusz Pszczółka ◽

Keyword(s):

Global Economy ◽

World Literature ◽

Statistical Data ◽

Basic Research ◽

Safe Haven ◽

European Central ◽

International Currencies ◽

The Us ◽

Bank For International Settlements ◽

Us Dollar

Purpose – The aim is to assess the importance of the most significant international currencies as safe haven currencies in the context of their position in the global economy in the light of the worldwide literature. Research method – The basic research methods used in the article are the study of world literature and the analysis of statistical data delivered by the European Central Bank and the Bank for International Settlements. Results – It is widely believed that the most important international currencies, the US dollar, the euro and the yen, also act as a safe haven. The conclusions from the analysis show that not all international currencies are equally considered as a safe haven. The most important safe haven currencies are the Swiss franc, the yen, the US dollar and, to a lesser extent, the euro. Performing the function of an international currency by the domestic currency predisposes it to be a safe haven, but this does not mean that it cannot be a currency that does not belong to the group of the most important international currencies. Implications /recommendations – The analysis of the significance of international currencies used as a safe haven in times of financial and economic crises, presented in the article, shows the importance of the problem and implies the need to undertake further research into this issue in the context of the benefits of using safe haven currencies by investors operating in the global economy.

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