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)
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