scholarly journals Asymmetric responses of East Asian currencies to the US dollar depreciation for reducing the US current account deficits

2007 ◽  
Vol 18 (1) ◽  
pp. 175-194 ◽  
Author(s):  
Eiji Ogawa ◽  
Takeshi Kudo
Keyword(s):  
Current Account ◽  
East Asian ◽  
Current Account Deficits ◽  
The Us ◽  
Us Dollar ◽  
Asymmetric Responses ◽  
Dollar Depreciation

scholarly journals CAN GOLD EFFECTIVELY HEDGE RISKS OF EXCHANGE RATE?

2013 ◽  
Vol 14 (5) ◽  
pp. 833-851 ◽  
Author(s):  
Kuan-Min Wang
Keyword(s):  
Exchange Rate ◽  
South African ◽  
Threshold Model ◽  
Monthly Data ◽  
Risk Hedging ◽  
Exchange Rate Fluctuations ◽  
The Us ◽  
Us Dollar ◽  
Japanese Yen ◽  
Dollar Depreciation

This study tests whether gold can effectively hedge exchange rate risks. We take into account the asymmetric characteristic of exchange rate fluctuations and use the dynamic panel threshold model in order to select gold prices in major gold-related currencies in the world: the Australian dollar, the Canadian dollar, the euro, the Indian rupee, the Japanese yen, the South African rand, and the British pound. Using monthly data from January 1999 to January 2010, with lagged one-period exchange rate returns (US dollar depreciation rate) as the threshold variable, the estimation results suggest that there are two thresholds at –7.5% and –3.7%. These can be divided into regime 1 (exchange rate returns ≤ –7.5%), regime 2 (–7.5% < exchange rate returns ≤ –3.7%), and regime 3 (exchange rate returns > –3.7%). Regarding the effectiveness of gold hedging, regime 2 is higher than is regime 3. The risk hedging effect of regime 1 is not significant because it might be caused by the excessive devaluation of the US dollar in the short-term and the overshooting of the exchange rate adjustment, making gold unable to hedge the devaluation risks of the US dollar.

scholarly journals The Limits to Dollarization in Ecuador: Lessons from Argentina

2011 ◽  
pp. 457-462
Author(s):  
Matias Vernengo ◽  
Mathew Bradbury
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Current Account ◽  
Foreign Capital ◽  
External Financing ◽  
Twin Deficits ◽  
The Us ◽  
Financing Gap ◽  
Us Dollar

The paper draws lessons from the failed Argentine experience with convertibility to highlight the dangers of dollarization in Ecuador. Argentina’s currency peg to the US dollar was successful in reducing inflation but given the overvalued real exchange rate, created burgeoning twin deficits and a chronic dependency on foreign capital. Ecuador too suffers from chronic current account imbalance. In contrast to Argentina, Ecuador seems to be relying on remittance income to close its external financing gap. Though perhaps this model is less unstable than that of relying on foreign capital it is no more sustainable. The paper closes with a realistic critique of thisdevelopment strategy.

The Economic Consequences of Higher Investment

2019 ◽  
pp. 127-135
Author(s):  
Andrew Smithers
Keyword(s):  
Public Sector ◽  
Interest Rates ◽  
Current Account ◽  
Economic Consequences ◽  
Fiscal Deficits ◽  
Share Prices ◽  
Current Account Deficits ◽  
The Us ◽  
Domestic Savings ◽  
Corporate Cash Holdings

Increased investment is essential to restore growth, but this will require higher savings as well as higher investment. Subject to the limited amount of help likely from rising current account deficits, domestic savings will need to rise at the expense of consumption. This will be unpopular. Those who claim that high corporate cash holdings mean that additional investment can be financed without more savings are confusing stocks with flows. Equally at fault are those who think that additional public sector investment will be painless because interest rates are so low. Companies in the US are the only major sector which is a habitual buyer of equities. Additional corporate investment will lead to fewer buy-backs, lower share prices, and higher household savings. This will narrow the savings gap, but fiscal deficits are highly correlatated with corporate net savings, so rising taxes are likely to be needed if investment rises.

scholarly journals (DE)STABILIZING EXCHANGE RATE STRATEGIES IN EAST ASIAN MONETARY AND ECONOMIC INTEGRATION

2016 ◽  
Vol 61 (02) ◽  
pp. 1640021 ◽  
Author(s):  
GUNTHER SCHNABL ◽  
KRISTINA SPANTIG
Keyword(s):  
Exchange Rate ◽  
East Asia ◽  
East Asian ◽  
Monetary Integration ◽  
Integration Process ◽  
Currency Exchange ◽  
The Us ◽  
Us Dollar ◽  
Japanese Yen ◽  
Chinese Yuan

The East Asian monetary integration process is at the crossroads. Given very benign liquidity conditions in the US, the prevailing common US dollar peg has contributed to growing macroeconomic and financial instability in the region. This has sparked demands to embark on an independent monetary integration process in East Asia. The paper shows that, however, neither the Japanese yen nor the Chinese yuan can challenge the US dollar as anchor currency in the region. Large fluctuations of the Japanese yen against the US dollar have undermined the potential of the Japanese yen to become a regional anchor currency. Exchange rate stability of the Chinese yuan against the US dollar has enhanced intra-regional exchange rate stability and growth, stressing the potential of the Chinese yuan to emerge as a regional anchor currency. Yet, it is shown that underdeveloped Chinese capital markets and financial repression originating in US low interest rate policies constitute an insurmountable impediment for the Chinese yuan to gain anchor currency status in East Asia. Empirical estimations provide evidence in favor of positive growth effects of the exchange rate stability against the US dollar in East Asia.

The World Economy

2005 ◽  
Vol 192 ◽  
pp. 11-32
Keyword(s):  
North America ◽  
Exchange Rates ◽  
Current Account ◽  
Risk Premium ◽  
World Economy ◽  
Strong Growth ◽  
Current Account Deficits ◽  
The Us ◽  
The World ◽  
Major Shift

Growth in the world economy looks robust, with growth averaging over 4 per cent a year in the last 2 years and in the first two years of our forecast. Strong demand in North America is a major factor behind this growth, and it has been associated with increasing current account deficits for the US, as we can see in Chart 1. The emerging imbalances that this strong growth has produced present a major risk to the world economy as they may induce major realignments of exchange rates. We analyse the implications of a major shift in the risk premium on the dollar in Al-Eyd, Barrell and Pomerantz in this Review.

Search for quality assets drives world reserves

2017 ◽  
Keyword(s):  
International Finance ◽  
Developing Economies ◽  
Foreign Exchange Reserves ◽  
Content Type ◽  
Academic Literature ◽  
Us Economy ◽  
The Us ◽  
The World ◽  
Us Dollar ◽  
Dollar Depreciation

Subject Global reserves outlook. Significance The growth of the foreign-exchange reserves of emerging and developing economies was a closely followed topic in international finance and policymaking circles in the 2000s. A new strand of academic literature suggests it might be in for a renaissance. Impacts The world will soon take more notice of the worsening US net external debt load. Paradoxically, the US economy generates these liabilities in part because the world demands them. US dollar depreciation will put domestic political pressure on large dollar reserve holders.

Steht das US-Leistungsbilanzdefizit vor einer Korrektur?

2002 ◽  
Vol 51 (3) ◽  
Author(s):  
Guido Zimmermann
Keyword(s):  
Current Account ◽  
Productivity Growth ◽  
Current Account Deficit ◽  
Capital Flight ◽  
Special Role ◽  
The Us ◽  
Us Dollar

AbstractWill the huge US current account deficit finally come down? Are lower capital imports into the US or even a capital flight out of the country threatening the US Dollar? I will argue that the US current account deficit will close gradually over the next years. Due to higher productivity growth relative to Europe and Japan and because of the special role of the US Dollar this will not entail a strong depreciation of the Dollar, however.

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