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A full haircut arising for a short securities differences is done?

User Tauna
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1 Answer

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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.

User Oreoshake
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