20041217-Euro Exchange Rate Volatility is Secondary for International Investments," Says IESE Prof. subject

According to José Manuel Campa, IESE professor at the University of Navarra, there are factors that ensure that the volatility of the subject exchange rate affecting the EU currency does not destabilize investments. "The volatility of the subject exchange rate generates uncertainty, and this is not good for investment," he said in his discussion paper presented at the University of Navarra as part of the XXIX Symposium on Economic Analysis.

However -he assured- all surveys to international investors indicate that other factors more linked to market stability such as the country's institutional status and growth expectations are more important in the determination to invest". Thus, "the volatility of the subject exchange rate is secondary to these other aspects".

The study also shows that, contrary to what has been maintained up to now, diversification of investments by sector produces higher returns than diversification by country. The author maintained that "one of the main reasons for this change is the process of integration and liberalization of international financial markets, which makes diversification in different countries less important".

This research is part of the papers presented at the XXIX Symposium on Economic Analysis, organized by the University of Navarra at partnership with the BBVA Foundation.

The Economic Analysis Symposium is held each year at a different university and this is the first time that it is being organized by the University of Navarra's School of Economics and Business Administration. It is also the first time that this event takes place in a non-state center. On this occasion, more than 300 researchers from national and foreign universities such as Harvard or Chicago will be present at quotation .