Estimates of Fundamental Equilibrium Exchange Rates, November 2013
AbstractSince the previous estimates of fundamental equilibrium exchange rates (FEERs) in May 2013, numerous exchange rates have moved substantially in response to the US Federal Reserve's announcement that it would likely begin to "taper" its quantitative easing. Despite widespread concern that this "taper shock" has wreaked havoc in international capital and currency markets, exchange rate misalignments have tended to narrow in the past six months. Overvalued currencies have corrected downward in Turkey, South Africa, India, Indonesia, and even Australia. Medium-term surplus estimates have moderated in Taiwan, Sweden, Switzerland, and Japan, narrowing the extent of their undervaluations. Cases of large misalignments persist, however, with Singapore once again undervalued by 21 percent, New Zealand again overvalued by nearly 18 percent, and Turkey still overvalued by 18 percent despite some correction. The overvaluation of the dollar and undervaluation of the Chinese renminbi remain modest and no longer constitute the severe imbalances of 2006–07.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Peterson Institute for International Economics in its series Policy Briefs with number PB13-29.
Date of creation: Dec 2013
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-12-15 (All new papers)
- NEP-MON-2013-12-15 (Monetary Economics)
- NEP-OPM-2013-12-15 (Open Economy Macroeconomics)
- NEP-SEA-2013-12-15 (South East Asia)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peterson Institute webmaster).
If references are entirely missing, you can add them using this form.