asked 68.9k views
2 votes
A full haircut arising for a short securities differences is done?

asked
User Tauna
by
8.8k points

1 Answer

3 votes

Final answer:

The risk of an exchange rate causing a trade imbalance and financial capital flows.

Step-by-step explanation:

The risk mentioned in the question is related to the potential consequences of an exchange rate that causes a large trade imbalance and significant inflows or outflows of financial capital.

When the exchange rate is misaligned, it can lead to trade imbalances, where a country imports more than it exports or exports more than it imports. This can disrupt economic stability and lead to high inflows or outflows of financial capital.

answered
User Oreoshake
by
8.2k points
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