CEPII, Recherche et Expertise sur l'economie mondiale
EQCHANGE annual assessment 2018

Carl Grekou

 Highlights :
  • As for 2016, the most important currency misalignments are concentrated in developing countries (DCs) and emerging economies (EMEs).
  • Currency misalignments also appear to be geographically concentrated: the level of undervaluation is rather homogenous in Latin America and Asia; we observe more heterogeneity in Africa.
  • The US dollar is still overvalued —although lesser than the previous year; the Chinese renminbi display a moderate undervaluation; the British pound, the Canadian dollar and the Japanese yen are moderately undervalued.
  • Europe is again featured by two opposite situations: the Northern Europe (extended to France) is undervalued while the Southern, South Eastern and Eastern Europe is overvalued.
  • Overall, the global configuration of currency misalignments is broadly unchanged in 2017—compared to 2016, with a tendency towards the narrowing/reduction of the misalignments.

 Abstract :
The present publication, which accompanies the 2018’s update of EQCHANGE, aims at providing an overview as extensive as possible of the exchange rate misalignments for the year 2017. It also aims at discussing the evolution of exchange rates and currency misalignments between 2016 and 2017 as well as their underlying factors, hence identifying global patterns and monitoring —global— imbalances. Despite some intra-year volatility across major currencies, the changes in the currency misalignments have been of relatively small amplitudes in 2017, thus leaving the global configuration of currency misalignments that prevailed in 2016 broadly unchanged. Relatively few countries, however, registered noticeable changes in their currency misalignments.

 Keywords : EQCHANGE | Exchange Rates | Currency Misalignments | Imbalances

 JEL : E3, E4, E5, E6, F3
CEPII Working Paper
N°2018-23, December 2018

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