Questions tagged [exchange-rates]

the price at which one currency may be exchanged for another.

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How can Japan have much lower inflation compared to US when Yen is much weaker compared to USD than 1 year ago?

I understand that Japanese people might not buy same stuff that US people buy, that inflation might be calculated differently, that people in Japan can buy services/products made inside Japan... and ...
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What does THO, as in "USD THO", stand for in export statistics?

I've noticed that some online sources use "USD THO" as a unit to express rates of transfer of value. Specifically, I saw it in measuring Chinese exports to Russia in this video at 21:20 ...
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How can the exchange rate be virtually constant with major inflation rate difference and a widening trade deficit?

I have recently had a discussion with a colleague about what seems to be a rather strange macroeconomic aspect in Romania (which has RON currency): EUR-RON exchange rate has been virtually a flat ...
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Where does the euro/dollar rate data prior to 2002 come from?

The Euro was created in 1999 and introduced in 2002. But if you search for the euro/dollar rate data there is a rate value back to Aug 1983. Where does this data come from?
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"Tract" - Keynes on course correction for France

Around 1926 France was observing that their neighbors had taken different approaches to rebooting the economy: Germany veered (excessively) on monetary expansion while Britain deflated to maintain ...
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List of Bretton Woods fixed parity currency rates

The Wikipedia article on the Bretton Woods system says: The Bretton Woods system required countries to guarantee convertibility of their currencies into U.S. dollars to within 1% of fixed parity ...
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Mistake in Wikipedia article on Fixed exchange rate system?

I think there is a mistake in the following Wikipedia-article: https://en.wikipedia.org/wiki/Fixed_exchange_rate_system at figure 2 and 3. I think the ECB has to BUY (not sell) the dollars as in point ...
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Why does a stronger US dollar translate to potentially lower sales and earning for Microsoft?

A recent headline stated: "Microsoft Corp. cut sales and earnings guidance for the fourth quarter, citing unfavorable foreign exchange rates as the stronger U.S. dollar takes a toll." ...
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Currency vs purchasing power?

When I search the internet about which is the strongest currency, the answer is the currency which buys more from other currencies. For example if 1 euro can buy 10 dollars then euro is a stronger ...
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Determining the FDI stock after valuation adjustements

Let $FDIS_t$ denote the FDI stock at the end of the year $t$ and $FL$ denote the FDI flow during the period from the end of year $t$ to the end of the year $t+1$. I want to determine $FDIS_{t+1}$ the ...
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Why did the Iranian Rial peak suddenly on 1 August 2014?

Search Iranian Rial and click on Max above the chart. Iranian Rial to Pound Sterling: Why did the Iranian Rial peak suddenly on August 1st 2014?
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Does Russian Ruble strengthening mean the sanctions did not hurt Russian economy?

After imposing the sanctions to Russia, 1 USD skyrocketed to 139 Rubles, but now it is back to the pre-war exchange rate. Moreover, it kept decreasing almost every day recently. Does this mean that ...
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How does US inflation impact dollarized nations?

For instance, would a high inflation rate on the US have any impact on countries that use the US dollar as their only legal tender, eg Ecuador or El Salvador? I often hear that high US inflation will ...
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What are the reasons for Russian Ruble to strengthen in the past few days?

1 USD was about 75 Russian Rubles before the war in Ukraine began. After the sanctions, Russian Ruble quickly declined and 1 USD skyrocketed to 139 Rubles. Now it is back to around 85. What are the ...
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Did Russia's GDP per capita really fall 38% between 2013 and 2020?

GPD per capita usually goes up over time due to improvements in technology, but Russia's fell dramatically from \$16,000 to \$10,000 in the 7 years from 20131. There was little change in Russia's ...
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Why doesn't Ukrainian currency suffer from the war?

The value of the Hryvnia, has hardly been affected by the Russian invasion of Ukraine on 21 february. https://www.google.com/search?channel=fs&client=ubuntu&q=hryvnia+to+euro I can think of ...
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Why does Russian ruble conversion rate to USD remains constant at 1 to 0.01?

I've been noticing that since Russian ruble started losing its value compared to other foreign currency, at some point it became at constant exchange rate of 1 RUB to 0.01 USD. That is, every day no ...
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Do exchange rate regimes *actually* matter?

Just read Itskhoki and Mukhin (2021) and they make the argument that because the change of monetary regime in 1971 from pegged exchange rate to floating only led to a change in volatility of the real ...
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How important are exchange rates for achieving full employment?

We often witness large swings in exchange rates without significant effects on GDP growth or inflation. Obviously it is difficult to isolate exchange rate effects however are they actually that ...
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How to make sense of Lebanese currency values in USD with a PPP conversion factor?

For example, I have data from a survey of adult citizens in 2014 showing an average annual salary of about 20000 LCU. I would like to find a comparable measure of the standard of living in Lebanon ...
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What does the price of bitcoin per ounce of gold tell us?

For example, see the below graph from https://charts.woobull.com/bitcoin-vs-gold/ It seems that intention is to isolate the effect of US dollar when assessing bitcoin's value, e.g. BTC quoted in US ...
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Monetary sterilization’s working is wrong?

Say, there is an increase in demand for dollars (as compared to the other currency, say yen), which will put appreciation pressures on dollar. Then to counter this appreciation, we need to buy yen. ...
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Does countries for which exchange rate is falling become cheaper

Is it a good idea to visit those countries whose currency is falling? (As in exchange rate). In another words does the items there become cheaper if I could now get more money in there currency for ...
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Is there any situations where real exchange rate positively impacts on national imports?

I'm working on a gravity model analysing the factors that affect national imports, and the results showed that the real exchange rate (real exchange rate between local currency and foreign currency) ...
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Relationship between Treasury yield and dollar

I understand it is common sense that treasury yield goes up, the dollar goes up as well due to the fact that domestic/foreign money are attracted to the higher yield therefore they need to buy more US ...
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Why is there such a big difference of purchasing power toward Coca-Cola between Euro in France and USD in USA, comparing to Big-Mac?

I have an assignment that requires me to pick an item and use it to create my own price level index, similar to Big-Mac index. In March 2021, the price of 0.5 litre Coca-Cola in France was 0.97 Euro ...
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Do exchange rate indicate richness/poorness of a country

Suppose there are two countries, A and B and if 1 unit of currency of A = x units of currency of B And x>1 does that mean that country A is richer or people are well off there?
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How are the rates between two currencies (fiat and cryptocurrecies) determined? [duplicate]

How are the exchange rate between two countries determined? For example how is exchange rate between the dollar and the euro established? My guess is it has to do with some form of demand/supply but I ...
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If the BOP is always equal to 0 then why would a trade imbalance cause currencies to fluctuate?

I am a bit confused in interpreting the correlation between a trade deficit/surplus & currency depreciation/appreciation. Considering BOP always equals 0 and a outflow in the current account is ...
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What are the main causes of disparity between nominal and PPP exchange rates?

(I'm not a student of economics and I have no idea about correct terminology and things. ) I've seen the acronym "PPP" in various places for a long time, but it's only recently I became ...
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Deflating value series in currency A with CPI based on prices in currency B?

Say we have time series data on the annual value of imports in the UK from the US (in US dollars). Would it be appropriate to deflate the latter using the UK Consumer Price Index (which is based on ...
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Effect of import quota on NCO, NX

I'm studying loanable funds from the book "Brief Principles of Macroeconomics, 6th ed". On page 307, the effects of an import quota are explained below. It said the net export rises, but NCO ...
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The impact of a devaluation of the national currency under a fixed exchange rate system

I would really be thankful if any of you could check my answer to the following question. Question: Describe, using the IS-LM-BP model, the impact of a devaluation of the national currency under a ...
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Shifts in IS in a fixed exchange rate mechanism

First, we assume we are in a fixed exchange rate mechanism. In this system, I deduce that the expected exchange rate would be fixed, at the market rate. In a floating system, with open capital markets,...
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Why would foreign asset purchases by PBOC temper yuan appreciation?

Suppose the PBOC buys a bunch of dollar-denominated bonds, using its dollar reserves. All else equal, what effect should this have on the yuan-USD exchange rate? And why? It amounts to trading non-...
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Why doesn't Dollar exchange rate go down?

I am from India and my question is related to conditions based in India which may be applicable to other countries as well. Dollar value is gradually rising in India. I was trying to understand why. ...
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Convert data in current US dollars to constant international dollars (PWT)

I would like to convert a nominal GDP series in US dollars to real GDP at constant PPP using Penn Wold Table (PWT) version 10.0 (see here). So far, I managed to get the real GDP at current PPP. Using ...
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Dynamics of interest rates, exchange rates and bond prices within the UIP

There are already a few questions about the workings of the UIP and the exchange rate. What I have basically taken from those discussions is that one always has to distinguish between the spot rate ...
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Value of Mexican Peso vs US Dollar in 1920s -- is silver content complete determiner?

I am rewatching The Treasure of the Sierra Madre which is set in Mexico in 1925 and they seem to use the term peso and dollar interchangeably -- for example, the trio of prospectors need another 100 ...
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Demand Curve of Foreign Exchange

My high-school Macroeconomics textbook states that 'There is an inverse relationship between the price of foreign currency, or exchange rate, and demand for foreign exchange. When the exchange rate ...
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Real Exchange Rate (Euro/Sterling)

What will be the real value of the Euro/Sterling exchange rate if: Given that: Index of UK prices$=118$, Index of Euro-area prices$=110$, Nominal Euro/Sterling exchange rate$=1.58$ and UK marginal tax ...
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Linearization around the steady state (Asset pricing application)

I am working through a linearization example from Colacito and Croce (2011). In the paper the following expression is derived: \begin{align} & (v^{i}_{c,t})^{\theta}=E_{t}[\delta e^{\Delta c^{i}_{...
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Microeconomic rationale for UIP (uncovered interest rate parity)

The key idea behind UIP is that as for all common financial instruments, the "law of no free lunch" should also hold for currencies. However it differs from traditional replication-based no-...
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Does inflation/expected inflation in a given country devalue its currency or increase its value?

I've seen both arguments. From my understanding an increase in the rate of inflation should decrease the value of the currency since it's by definition a depreciation in its purchasing power. But I've ...
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Exchange rate modeling using a system of ODEs

I am looking for a book that explains exchange rates, capital flows, reserves, trade balance using a system of ordinary differential equations. An economist by the name of Muller-Plantenberg has this ...
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Why is the US rating AAAA+ after they printed trillions of dollars out of thin air, and bailed out the US stock market? [closed]

When any other country tries to print, there's huge inflation, devalued currency, bad ratings from rating companies (mostly US go figure why?), interest rates increases. But why don't these happen to ...
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How do you read currency exchange rates in terms of domestic and foreign currency?

I am having some issues understanding how to read exchange rates. E is the exchange rate I read online that if we have for example E\$/€, then the base currency in this case is the dollar and the ...
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How to define world interest rate using IS-LM-BP diagram?

Can you suggest where is the world interest rate in the economy which has a positive current account and a financial account surplus, fixed exchange rate and relative capital immobility? The graph of ...
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How do transactions in different currencies work?

Very basic question but I have not much knowledge in this field so sorry: Say I have a bank account and over the past year there were transactions in different currencies. I am guessing that a ...
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Math based proof for currency changes

This isn't part of my homework but I am genuinely interested in the mathematical proof behind this question (this is my line of work currently). I tried to work through it but after 2 hours gave up. ...