By Yoko Nishikawa and Alan Wheatley TOYAKO, Japan (Reuters) - The Group of Eight industrial nations expressed strong concern on Tuesday about sky-high food and oil prices, which they said posed risks for a global economy under serious financial strain. In a statement...
By Alan Wheatley, China Economics Editor TOYAKO, Japan (Reuters) - It is hard to know how far the global financial crisis still has to run, with the extent of further credit losses hinging on what happens to the U.S. housing sector, IMF chief...
Central banks implement monetary policy through financial markets. As a result, they need to understand how the markets will perceive their actions. bankers routinely examine forward rates and the prices of futures for both interest rates and exchange rates for signs of the market's expectations of future movements in interest...
BEIJING (Reuters) - China must make a stand against the opponents of reform and allow market forces to play a greater role in setting prices, including the yuan's exchange rate, a senior U.S. official said on Thursday. Alan Holmer, the U.S. Treasury's special...
This calculator shows how a change in the exchange rate of two countries affects the rate of return, either positively or adversely, that you earn from investing in shares of a mutual fund of that country. This risk of exchange rates potentially increasing or reducing the value of your foreign...
To buy shares of a foreign stock, you need to pay for them in the local currency. Start by calculating the exchange rate between the currency and the dollar on the day you buy the shares. This calculator shows how a change in the exchange rate of two countries affects...
When companies undertake international business, they take a risk because their investments and business operations may be affected by changes in the exchange rates for different currencies. This risk is known as exchange rate risk.Increasingly, companies are fighting for a slice of global markets, particularly in developing nations, and putting...
This paper analyses the relationship between productivity and real exchange rates in Japan, United States, Germany and the European Union. Prior studies have revealed that productivity shocks have a minimum effect on real exchange rate fluctuations. This paper shows that productivity shocks account for most of the long-run fluctuations in...
The paper examines the effect of exchange rate changes on consumer prices in Tanzania using structural Vector AutoRegression VAR models. Using a data set covering the period 1990 - 2005, it is found that the exchange rate pass-through to inflation declined in the late 1990s despite the depreciation of the...
The shift to inflation targeting has contributed to the relatively low inflation observed in some emerging market economies although, as noted by many economists, the preconditions required for a successful implementation were not in place. The existence of managed exchange rate regimes, a narrow base of domestic nominal financial assets,...
Border prices of traded goods are highly sensitive to exchange rates while the CPI Consumer Price Index, and the prices of these goods at the retail level, are more stable. This paper decomposes the sources of this stability for twenty-one OECD (Organisation for Economic Co-Operation and Development) countries, focusing on...
This paper examines the behavior of a risk-averse MultiNational Firm MNF making investment in a foreign country under exchange rate uncertainty. To hedge the exchange rate risk, the MNF has access to an unbiased currency forward market. Foreign Direct Investment FDI is irreversible and sequential in that the MNF can...
This paper examines whether the traditional sets of macro surprises, that most of the literature considers, are the only sorts of news that can explain exchange rate movements. It examines the intra-daily influence of a broad set of news reports, including variables which are not typically considered "fundamentals" in the...
This paper argues that when the exchange rate and projected sales in the host country are jointly determined by underlying macroeconomic variables, standard regressions of FDI Foreign Direct Investment flows on both exchange rate levels and volatility are subject to bias. The results hinge on the interaction of macroeconomic uncertainty,...
This paper develops the basis for monetary and exchange rate coordination in Asia as part of a package of monetary integration that could support growth and poverty reduction. This could be achieved directly through coordinated exchange rate stabilization, and indirectly through the implications of this for reserve pooling and investment...
This paper presents an empirical analysis of transmission rates from exchange rate movements to import prices, across countries and product categories, in the euro area over the last fifteen years. The results show that the transmission of exchange rate changes to import prices in the short run is high, although...
This paper studies the empirical and theoretical association between the duration of a pegged exchange rate and the cost experienced upon exiting the regime. It confirms empirically that exits from pegged exchange rate regimes during the past two decades have often been accompanied by crises, the cost of which increases...
Several alternative measures of "effective" exchange rates are discussed in the context of their theoretical underpinnings and actual construction. Focusing on contemporary indices and recently developed econometric methods, the empirical characteristics of these differing series are examined, including the exchange rates for the U.S., the euro area and several East...
The authors set up a three-country model with coexistence of horizontal multinationals and exporters that engage in Cournot competition. This model studies the effects of exchange rate appreciation. Thereby, special emphasis is put on the role of third-country effects for multinational activities. In particular, the authors are interested in the...
Growing global financial integration has influenced monetary policy in important ways. Developments have shown, however, that, while many countries have adopted more flexible exchange rate regimes, they often intervene to dampen exchange rate movements. Such developments raise several questions. The paper addresses these questions. It discusses the choice of exchange...
