Abstract
Given that renminbi always breaks the historical high against USD, psychological literature on limited investor attention motivates me to consider whether this eye-grabbing event would have an impact on renminbi trading. Empirical evidence suggests that both nearness to the historical high and hitting the historical high negatively affect renminbi future returns. This result survives from a variety of robustness checks. My findings are consistent with the conservatism theory and suggest that investors tend to under-react in response to the news of breaking the historical high.
| Original language | English |
|---|---|
| Pages (from-to) | 667-689 |
| Number of pages | 23 |
| Journal | Singapore Economic Review |
| Volume | 63 |
| Issue number | 3 |
| Early online date | 2 Sept 2015 |
| DOIs | |
| Publication status | Published - Jun 2018 |
| Externally published | Yes |
Bibliographical note
Publisher Copyright:© 2018 World Scientific Publishing Company.
Funding
I thank financial support from the Open University of Hong Kong School Research Grant for this project (Project Code: R2051). All errors remain my own responsibility.
Keywords
- foreign exchange markets
- Investor attention
- renminbi trading
- technical analysis