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The Current Currency Situation

Author

Listed:
  • William R. Cline

    () (Peterson Institute for International Economics)

  • John Williamson

    () (Peterson Institute for International Economics)

Abstract

The currency markets have been extremely disturbed for the last three months. The period witnessed a major strengthening of the US dollar in September, then the European currency crisis, a recovery of the euro when the markets believed that the crisis was being controlled, and then a rebound of the dollar. In view of these developments, those who follow currency movements need a new guide as to how the current values of currencies compare to our estimates of fundamental equilibrium exchange rates (FEERs). The first section is devoted to a brief exposition of the main changes that have occurred since April, which our previous publication used as the benchmark. The second section updates information on the levels of effective exchange rates consistent with the FEER targets identified in our most recent estimates (Cline and Williamson 2011), as well as the FEER-consistent dollar rates as of late October. The third section steps outside our normal frame of reference in order to make some comments about the situation within Europe in view of the sovereign debt crisis currently raging there.

Suggested Citation

  • William R. Cline & John Williamson, 2011. "The Current Currency Situation," Policy Briefs PB11-18, Peterson Institute for International Economics.
  • Handle: RePEc:iie:pbrief:pb11-18
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    File URL: https://piie.com/publications/policy-briefs/current-currency-situation
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    Citations

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    Cited by:

    1. Cécile Couharde & Serge Rey & Audrey Sallenave, 2016. "External debt and real exchange rates’ adjustment in the euro area: new evidence from a nonlinear NATREX model," Applied Economics, Taylor & Francis Journals, vol. 48(11), pages 966-986, March.
    2. Vincent Duwicquet & Jacques Mazier & Jamel Saadaoui, 2013. "Désajustements de change, fédéralisme budgétaire et redistribution. Comment s'ajuster en union monétaire," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 57-96.
    3. William R. Cline, 2012. "Projecting China's Current Account Surplus," Policy Briefs PB12-7, Peterson Institute for International Economics.
    4. repec:wsi:ceprxx:v:02:y:2013:i:01:n:s1793969013500039 is not listed on IDEAS
    5. Zhibai, Zhang, 2012. "RMB Undervaluation and Appreciation," MPRA Paper 40978, University Library of Munich, Germany.
    6. Vincent Duwicquet & Jacques Mazier & Jamel Saadaoui, 2012. "Exchange Rate Misalignments, Fiscal Federalism and Redistribution: How to Adjust in a Monetary Union," Post-Print halshs-00848886, HAL.
    7. Saadaoui, Jamel, 2012. "Déséquilibres globaux, taux de change d’équilibre et modélisation stock-flux cohérente
      [Global Imbalances, Equilibrium Exchange Rates and Stock-Flow Consistent Modelling]
      ," MPRA Paper 51332, University Library of Munich, Germany.
    8. Pedro Bação & António Portugal Durate & Mariana Simões, 2013. "The International Monetary System in Flux: Overview and Prospects," GEMF Working Papers 2013-07, GEMF, Faculty of Economics, University of Coimbra.
    9. Ana Cardoso & António Portugal Duarte, 2015. "The Impact of the Chinese Exchange Policy on Foreign Trade with the European Union," GEMF Working Papers 2015-09, GEMF, Faculty of Economics, University of Coimbra.
    10. Benjamin Carton & Karine Hervé, 2013. "Is There any Rebalancing in the Euro Area?," Working Papers 2013-32, CEPII research center.

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