A global imbalances are beginning to widen again foreign-exchange markets have experienced increasing volatility in recent weeks with large swings in bilateral rates resulting in often large changes in effective rates. Some of these movements are consistent with an adjustment in imbalances. In the case of the dollar, its depreciation (4.2% since 1 September in nominal effective terms) contributes to the rebalancing of US production from internal to external demand and alleviates deflationary risks in the United States. Similarly, the moderate appreciation that has occurred in emerging market economies such as Brazil and India (1.1% since 1 September in nominal effective terms in both countries) should help them to contain inflationary pressures but may exacerbate their current account deficit unless… Read more
Bruegel blog
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Recent exchange rate developments and the scope for G20 international collaboration
27th October 2010
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Recent exchange rate developments and the scope for G20 international collaboration
27th October 2010
A global imbalances are beginning to widen again foreign‐exchange markets have experienced increasing volatility in recent weeks with large swings in bilateral rates resulting in often large changes in effective rates. Some of these movements are consistent with an adjustment in imbalances. In the case of the dollar, its depreciation (4.2% since 1 September in nominal effective terms) contributes to the rebalancing of US production from internal to external demand and alleviates deflationary risks in the United States. Similarly, the moderate appreciation that has occurred in emerging market economies such as Brazil and India (1.1% since 1 September in nominal effective terms in both countries) should help them to contain inflationary pressures but may exacerbate their current account deficit unless… Read more