Exchange rates

Sascha Bützer, Maurizio Michael Habib, Livio Stracca, 07 March 2015

The large dip in oil prices reverberated across asset markets, contributing to the depreciation of the Russian rouble. This column argues that the recent fall of the rouble may be more an exception than the norm. Oil shocks have only a limited impact on global exchange rate configurations, since oil exporters tend to lean against exchange rate pressures by running down or accumulating foreign exchange reserves.

Konstantins Benkovskis, Julia Woerz, 24 February 2015

There is no single replicable and comprehensive indicator of competitiveness that can be applied to various entities. In this column, the authors propose a novel decomposition of market share growth that captures non-price factors, such as quality or tastes. The findings imply that relying solely on price factors to determine a country’s competiveness might be misleading. For instance, central for boosting China’s presence in the global market were improvements in non-price factors. The role played by the exchange rate has been less important. 

Lars P Feld, Christoph M Schmidt, Isabel Schnabel, Benjamin Weigert, Volker Wieland, 20 February 2015

Claims that ‘austerity has failed’ are popular, especially in the Anglo-Saxon world. This column argues that this narrative is factually wrong and ignores the reasons underlying the Greek crisis. The worst move for Greece would be to return to its old ways. Greece needs to realise that things could actually become much worse than they are now, particularly if membership in the Eurozone cannot be assured. Instead of looking back, Greece needs to continue building a functioning state and a functioning market economy.

Dario Fauceglia, Andrea Lassmann, Anirudh Shingal, Martin Wermelinger, 18 February 2015

The sharp appreciation of the Swiss franc has once more raised fears about negative export growth and resulting losses for Swiss exporters. However, this column suggests that the Swiss economy’s high level of integration into global value chains potentially mitigates these negative effects by rendering imported intermediate inputs cheaper, thus reducing pressures on profit margins through the imported inputs channel.

Plamen Iossifov, Jiří Podpiera, 16 February 2015

The ongoing, synchronised disinflation across Europe raises the question of whether non-Eurozone EU countries are affected by the undershooting of the Eurozone inflation target, by other global factors, or by synchronised domestic, real sector developments. This column argues that falling world food and energy prices have been the main disinflationary driver. However, countries with more rigid exchange-rate regimes and/or higher shares of foreign value added in domestic demand have also been affected by disinflationary spillovers from the Eurozone.

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