Economics Bonds Questions
The impact of currency exchange rates on international bonds is that they can affect the returns and risks associated with these bonds. Fluctuations in currency exchange rates can lead to changes in the value of the bond's principal and interest payments when converted into the investor's home currency. If the investor's home currency strengthens against the bond's currency, the investor may receive higher returns. Conversely, if the investor's home currency weakens, the returns may be lower. Currency exchange rate movements can also introduce additional risks, such as exchange rate risk, which can impact the overall performance and attractiveness of international bonds.