If movements of two currencies with low interest rates are highly negatively correlated, then financing in a portfolio of currencies would not be very beneficial. That is, financing with such a portfolio would not be very different from financing with a single foreign currency.

Question

Quizplus · Accepted Answer

A portfolio of negatively correlated currencies can reduce risk through diversification, potentially offering benefits over financing with a single currency.

If Movements of Two Currencies with Low Interest Rates Are