What Explains Movements in the Peso/Dollar Exchange Rate?
AbstractThis paper examines the factors affecting the weekly peso/dollar exchange rate movements between 1999 and 2013 using an error correction model. The model fits the historical data well. While copper price is the most important determinant of the peso exchange rate over the long run, other factors including interest rate differential, global financial distress, local pension fundsâ€™ derivative position, as well as the Federal Reserveâ€™s quantitative easing also affect the peso in the short run. The Central Bank of Chileâ€™s foreign exchange interventions in 2008 and 2011 had a small impact on the peso.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 13/171.
Date of creation: 18 Jul 2013
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-26 (All new papers)
- NEP-MON-2013-09-26 (Monetary Economics)
- NEP-OPM-2013-09-26 (Open Economy Macroeconomic)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kevin Cowan & David Rappoport & Jorge Selaive, 2007. "High Frequency Dynamics of the Exchange Rate in Chile," Working Papers Central Bank of Chile 433, Central Bank of Chile.
- José De Gregorio & Andrea Tokman R., 2004. "Flexible Exchange Rate Regime and Forex Interventions: The Chilean Case," Economic Policy Papers Central Bank of Chile 11, Central Bank of Chile.
- Paul Cashin & Luis Felipe Céspedes & Ratna Sahay, 2003.
"Commodity Currencies and the Real Exchange Rate,"
Working Papers Central Bank of Chile
236, Central Bank of Chile.
- Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-76, December.
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