The Birds and the Bees (and Currency Markets)

Who would have thought what you did (or didn't do) in your bedroom with your significant other would have an effect on international finance?

But according to economic theory, it's a no-brainer.

The global fertility rate has fallen from 3.92 births per woman in the late 1970's to 2.65 births per woman in 2005, according to United Nations data. As people have less children, they start to save more of their money (for the simple reason that it takes resources to raise kids). At the same time, the level of investment can drop since there are fewer people in the future to take advantage of the fruits of that investment.

"If savings rise and investment falls, the current account improves and a real depreciation of the exchange rate is part of the equilibrium response," write Andrew Rose of Berkeley and Saktiandi Supaat of the Monetary Authority of Singapore in a new working paper.

The two looked at fertility and foreign exchange data from 87 countries between 1975 and 2005 and found that a fall in fertility equal to one less child per woman has meant a 0.15 percent drop in the real exchange rate.

So I guess leaders who want "stronger" currencies can now call on their constituents to have more sex - and use less contraception.