I’m finding it confusing to understand when is it -ve or +ve domestic exposure in the IAP chapter of PM.
Domestic currency exposure is ALWAYS a positive value. it’s never negative. It’s always a value between 0 and +2.
However, it’s local currency expoeure, LC(y) that can be either poeitive or negative. It’s value lies between -1 (when the stock returns are perfectly negatively correlated to the currency movements) and +1(when the stock returns are perfectly positively correlated to the currency movements)