01781cas a2200241 a 4500 AALejournalIMF002960 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451946086 1018-5941 BD-DhAAL BD-DhAAL Rajasingham, Indi. Currency Diversification of Reserves and Sovereign Debt for Small Open Economies / Indi Rajasingham. Washington, D.C. : International Monetary Fund, 1991. 1 online resource (48 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students An approach for minimizing risk through diversification of foreign exchange reserves and sovereign borrowings is proposed for central banks of small open economies. This approach--developed in a simple 2-period, 3-country framework--differs from past work in that the elements of exchange and price risk associated with trade and payments are considered in the portfolio allocation problem. The analysis shows that the net level of reserves and the primary transactions balance affect the optimal portfolio leading to deviations from the optimal allocation prescribed by the classical portfolio model. In addition, this result has implications for the currency composition of exchange market intervention transactions. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1991/109 Full text available on IMF http://elibrary.imf.org/view/journals/001/1991/109/001.1991.issue-109-en.xml IMF e-Library