Keep the currency quote clear
Imagine investing AED 10,000 in an unhedged foreign asset. We measure the exchange rate as AED per unit of foreign currency. A 10% fall in that quote means each foreign-currency unit now buys 10% fewer dirhams.
First the asset, then the conversion
Suppose the investment rises 10% in its own currency while that currency falls 10% against AED over the same period. The ending home-currency value is AED 10,000 × 1.10 × 0.90 = AED 9,900. The foreign gain becomes a 1% loss when measured in dirhams.
Multiply the factors
Home-currency return = (1 + local asset return) × (1 + currency return) − 1. Adding +10% and −10% misses their interaction. If the asset and currency both rise 10%, the combined gain is 21%, not 20%.
A quote convention is part of the model
Using foreign-currency units per AED would require the inverse exchange-rate factor. The explorer always uses AED per foreign-currency unit. It assumes no hedging, income distributions, fees or taxes. These are hypothetical percentage changes, not live exchange rates or a forecast for a particular currency.
Sources & further reading
Sources checked 13 November 2026. These organisations provide reference material and do not endorse this website.
