Exchange Rates during the Crisis
Nearly two years after the onset of the financial crises, many central banks have brought their policy interest rates down to, or close to zero. Various governments have seen their budget deficits soar. Both policies have affected exchange rates, p...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090921124246 http://hdl.handle.net/10986/4250 |
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okr-10986-4250 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
BANKING SYSTEMS BLACK MARKETS BUDGET DEFICITS BUFFER CAPITAL ACCOUNT CAPITAL CONTROLS CAPITAL FLIGHT CAPITAL MOVEMENTS CAPITAL OUTFLOW CENTRAL BANK CENTRAL BANK POLICY CENTRAL BANKS COMMODITY COMPETITIVE DEVALUATIONS COMPETITIVE EXCHANGE RATE COMPETITIVE EXCHANGE RATES COMPETITIVENESS COMPLEX INSTRUMENT CONVENTIONAL INSTRUMENT CREDIT EXPANSION CREDIT FACILITY CURRENCY CURRENCY EARNINGS CURRENCY PEG CURRENT ACCOUNT CURRENT ACCOUNT BALANCE CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT DEFICITS CURRENT ACCOUNT POSITION CURRENT ACCOUNT SURPLUS CURRENT ACCOUNT SURPLUSES DEBT BURDENS DEBT INTEREST DEBT LEVEL DEBT LEVELS DEBT RATIO DEBTS DEFLATION DEMAND FOR CREDIT DEPRECIATION DEPRECIATIONS DEPRESSION DEPRESSIONS DEVALUATION DEVELOPING COUNTRIES DISINFLATION DISTRIBUTIONAL EFFECTS DOMESTIC BANKING DOMESTIC CONSUMPTION ECONOMETRIC ESTIMATES ECONOMIC FORECASTING ECONOMIC OUTLOOK EFFECTIVE EXCHANGE RATE ELASTICITY EMERGING MARKETS EMERGING-MARKET EQUILIBRIUM EQUILIBRIUM LEVELS EQUITY INVESTMENT EURO ZONE EXCHANGE RATE EXCHANGE RATE ARRANGEMENTS EXCHANGE RATE BAND EXCHANGE RATE DEVALUATIONS EXCHANGE RATE FLOATS EXCHANGE RATE FLUCTUATIONS EXCHANGE RATE INTERVENTION EXCHANGE RATE INTERVENTIONS EXCHANGE RATE MISALIGNMENT EXCHANGE RATE MOVEMENTS EXCHANGE RATE POLICIES EXCHANGE RATE POLICY EXCHANGE RATE REGIMES EXCHANGE RATE STABILITY EXCHANGE RATES EXPANSIONARY FISCAL POLICY EXPANSIONARY POLICIES EXPENDITURES EXPLICIT EXCHANGE RATE EXPORT GOODS EXPORT MARKET EXPORT MARKETS EXPORT REVENUES EXPORTER EXPORTERS EXTERNAL BALANCE EXTERNAL COMPETITIVENESS EXTERNAL POSITION EXTERNAL POSITIONS EXTERNAL TRADE FINANCIAL ARCHITECTURE FINANCIAL CAPITAL FINANCIAL CENTRE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEMS FISCAL POLICIES FISCAL POLICY FIXED EXCHANGE RATES FLEXIBLE EXCHANGE RATE FLEXIBLE EXCHANGE RATE REGIME FLEXIBLE EXCHANGE RATES FLOATER FOREIGN ASSET FOREIGN ASSET POSITION FOREIGN ASSETS FOREIGN BORROWING FOREIGN CURRENCY FOREIGN CURRENCY DEBT FOREIGN CURRENCY REVENUES FOREIGN EXCHANGE FOREIGN EXCHANGE MARKET FOREIGN EXCHANGE RESERVES FOREIGN LIABILITIES FOREIGN LIABILITY FOREIGN RESERVES GLOBAL CURRENT ACCOUNT IMBALANCES GLOBAL IMBALANCES GLOBAL OUTPUT GLOBAL TRADE GOLD GOLD STANDARD GOVERNMENT CONSUMPTION GROWTH RATE HIGH INFLATION HISTORY OF EXCHANGE RATE HOLDING IMPORTS INDUSTRIAL COUNTRIES INFLATION INFLATION FORECASTS INFLATION RATE INFLATION RATES INSTRUMENT INTEREST RATE INTEREST RATE DIFFERENTIALS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL INVESTORS INTERNATIONAL MONETARY SYSTEM INTERNATIONAL MONEY INTERNATIONAL TRADE LIQUIDATION LIQUIDITY LOCAL CURRENCY LOSS OF COMPETITIVENESS MACROECONOMIC POLICY MARKET COMPETITION MARKET COUNTRIES MARKET EXPECTATIONS MARKET FORCES MARKET PRESSURE MARKET SHARE MISALIGNMENTS MONETARY EXPANSION MONETARY POLICIES MONETARY POLICY NOMINAL EXCHANGE RATE NOMINAL EXCHANGE RATES NOMINAL INTEREST RATE OPEN ECONOMIES OUTPUT OUTPUT DECLINE OVERVALUATION PEG POLICY RESPONSES POLITICAL CONSIDERATIONS POLITICAL ECONOMY POSITIVE EXTERNALITIES POVERTY REDUCTION PROTECTIONISM PUBLIC DEBT REAL EXCHANGE RATE REAL EXCHANGE RATE MISALIGNMENTS REAL EXCHANGE RATES REAL INTEREST REAL INTEREST RATES RECESSION REPAYMENT RESERVE ROBUSTNESS CHECK SEIZURE SLOWDOWN SMALL COUNTRIES STANDARD DEVIATIONS SURPLUS COUNTRIES SURPLUSES TOTAL EXPORTS TOTAL OUTPUT TRADABLE GOOD TRADE BALANCE TRADE PATTERN TRADE PATTERNS TRADE PROTECTION TRADE SHARES TRADE SURPLUSES TRADING TRADING PARTNERS TRANSACTION UNCERTAINTY VOLATILITY VOLATILITY IN EXCHANGE RATE WEIGHTS WORLD MARKET |
| spellingShingle |
BANKING SYSTEMS BLACK MARKETS BUDGET DEFICITS BUFFER CAPITAL ACCOUNT CAPITAL CONTROLS CAPITAL FLIGHT CAPITAL MOVEMENTS CAPITAL OUTFLOW CENTRAL BANK CENTRAL BANK POLICY CENTRAL BANKS COMMODITY COMPETITIVE DEVALUATIONS COMPETITIVE EXCHANGE RATE COMPETITIVE EXCHANGE RATES COMPETITIVENESS COMPLEX INSTRUMENT CONVENTIONAL INSTRUMENT CREDIT EXPANSION CREDIT FACILITY CURRENCY CURRENCY EARNINGS CURRENCY PEG CURRENT ACCOUNT CURRENT ACCOUNT BALANCE CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT DEFICITS CURRENT ACCOUNT POSITION CURRENT ACCOUNT SURPLUS CURRENT ACCOUNT SURPLUSES DEBT BURDENS DEBT INTEREST DEBT LEVEL DEBT LEVELS DEBT RATIO DEBTS DEFLATION DEMAND FOR CREDIT DEPRECIATION DEPRECIATIONS DEPRESSION DEPRESSIONS DEVALUATION DEVELOPING COUNTRIES DISINFLATION DISTRIBUTIONAL EFFECTS DOMESTIC BANKING DOMESTIC CONSUMPTION ECONOMETRIC ESTIMATES ECONOMIC FORECASTING ECONOMIC OUTLOOK EFFECTIVE EXCHANGE RATE ELASTICITY EMERGING MARKETS EMERGING-MARKET EQUILIBRIUM EQUILIBRIUM LEVELS EQUITY INVESTMENT EURO ZONE EXCHANGE RATE EXCHANGE RATE ARRANGEMENTS EXCHANGE RATE BAND EXCHANGE RATE DEVALUATIONS EXCHANGE RATE FLOATS EXCHANGE RATE FLUCTUATIONS EXCHANGE RATE INTERVENTION EXCHANGE RATE INTERVENTIONS EXCHANGE RATE MISALIGNMENT EXCHANGE RATE MOVEMENTS EXCHANGE RATE POLICIES EXCHANGE RATE POLICY EXCHANGE RATE REGIMES EXCHANGE RATE STABILITY EXCHANGE RATES EXPANSIONARY FISCAL POLICY EXPANSIONARY POLICIES EXPENDITURES EXPLICIT EXCHANGE RATE EXPORT GOODS EXPORT MARKET EXPORT MARKETS EXPORT REVENUES EXPORTER EXPORTERS EXTERNAL BALANCE EXTERNAL COMPETITIVENESS EXTERNAL POSITION EXTERNAL POSITIONS EXTERNAL TRADE FINANCIAL ARCHITECTURE FINANCIAL CAPITAL FINANCIAL CENTRE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEMS FISCAL POLICIES FISCAL POLICY FIXED EXCHANGE RATES FLEXIBLE EXCHANGE RATE FLEXIBLE EXCHANGE RATE REGIME FLEXIBLE EXCHANGE RATES FLOATER FOREIGN ASSET FOREIGN ASSET POSITION FOREIGN ASSETS FOREIGN BORROWING FOREIGN CURRENCY FOREIGN CURRENCY DEBT FOREIGN CURRENCY REVENUES FOREIGN EXCHANGE FOREIGN EXCHANGE MARKET FOREIGN EXCHANGE RESERVES FOREIGN LIABILITIES FOREIGN LIABILITY FOREIGN RESERVES GLOBAL CURRENT ACCOUNT IMBALANCES GLOBAL IMBALANCES GLOBAL OUTPUT GLOBAL TRADE GOLD GOLD STANDARD GOVERNMENT CONSUMPTION GROWTH RATE HIGH INFLATION HISTORY OF EXCHANGE RATE HOLDING IMPORTS INDUSTRIAL COUNTRIES INFLATION INFLATION FORECASTS INFLATION RATE INFLATION RATES INSTRUMENT INTEREST RATE INTEREST RATE DIFFERENTIALS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL INVESTORS INTERNATIONAL MONETARY SYSTEM INTERNATIONAL MONEY INTERNATIONAL TRADE LIQUIDATION LIQUIDITY LOCAL CURRENCY LOSS OF COMPETITIVENESS MACROECONOMIC POLICY MARKET COMPETITION MARKET COUNTRIES MARKET EXPECTATIONS MARKET FORCES MARKET PRESSURE MARKET SHARE MISALIGNMENTS MONETARY EXPANSION MONETARY POLICIES MONETARY POLICY NOMINAL EXCHANGE RATE NOMINAL EXCHANGE RATES NOMINAL INTEREST RATE OPEN ECONOMIES OUTPUT OUTPUT DECLINE OVERVALUATION PEG POLICY RESPONSES POLITICAL CONSIDERATIONS POLITICAL ECONOMY POSITIVE EXTERNALITIES POVERTY REDUCTION PROTECTIONISM PUBLIC DEBT REAL EXCHANGE RATE REAL EXCHANGE RATE MISALIGNMENTS REAL EXCHANGE RATES REAL INTEREST REAL INTEREST RATES RECESSION REPAYMENT RESERVE ROBUSTNESS CHECK SEIZURE SLOWDOWN SMALL COUNTRIES STANDARD DEVIATIONS SURPLUS COUNTRIES SURPLUSES TOTAL EXPORTS TOTAL OUTPUT TRADABLE GOOD TRADE BALANCE TRADE PATTERN TRADE PATTERNS TRADE PROTECTION TRADE SHARES TRADE SURPLUSES TRADING TRADING PARTNERS TRANSACTION UNCERTAINTY VOLATILITY VOLATILITY IN EXCHANGE RATE WEIGHTS WORLD MARKET Weber, Sebastian Wyplosz, Charles Exchange Rates during the Crisis |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 5059 |
| description |
Nearly two years after the onset of the
financial crises, many central banks have brought their
policy interest rates down to, or close to zero. Various
governments have seen their budget deficits soar. Both
policies have affected exchange rates, partly through market
expectations. With a majority of exchange rates officially
floating, exchange rate movements do not necessarily reflect
official decisions as was the case in the 1930s. Yet, also
in the 2008 crisis, authorities have directly intervened in
the foreign exchange market, sometimes in order to defend a
falling currency but in other instances with the aim to
limit appreciation pressure, akin of competitive
devaluations. This paper documents the exchange rate
interventions during the height of the 2008/09 financial
crisis and identifies the countries which have particular
high incentives to intervene in the foreign exchange market
to competitively devalue their currency. While various
countries had increased incentives to devalue, we find that
direct exchange rate interventions have been rather limited
and contagion of devaluation has been restricted to one
regionally contained case. However, sharp market-driven
exchange rate movements have reshaped competitive positions.
It appears that these movements have so far not seriously
disrupted global trade. After all, a world crisis is likely
to require widespread exchange rate adjustments as different
countries are affected in different ways and have different
capacities to weather the shocks. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Weber, Sebastian Wyplosz, Charles |
| author_facet |
Weber, Sebastian Wyplosz, Charles |
| author_sort |
Weber, Sebastian |
| title |
Exchange Rates during the Crisis |
| title_short |
Exchange Rates during the Crisis |
| title_full |
Exchange Rates during the Crisis |
| title_fullStr |
Exchange Rates during the Crisis |
| title_full_unstemmed |
Exchange Rates during the Crisis |
| title_sort |
exchange rates during the crisis |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090921124246 http://hdl.handle.net/10986/4250 |
| _version_ |
1764390595779887104 |
| spelling |
okr-10986-42502021-04-23T14:02:16Z Exchange Rates during the Crisis Weber, Sebastian Wyplosz, Charles BANKING SYSTEMS BLACK MARKETS BUDGET DEFICITS BUFFER CAPITAL ACCOUNT CAPITAL CONTROLS CAPITAL FLIGHT CAPITAL MOVEMENTS CAPITAL OUTFLOW CENTRAL BANK CENTRAL BANK POLICY CENTRAL BANKS COMMODITY COMPETITIVE DEVALUATIONS COMPETITIVE EXCHANGE RATE COMPETITIVE EXCHANGE RATES COMPETITIVENESS COMPLEX INSTRUMENT CONVENTIONAL INSTRUMENT CREDIT EXPANSION CREDIT FACILITY CURRENCY CURRENCY EARNINGS CURRENCY PEG CURRENT ACCOUNT CURRENT ACCOUNT BALANCE CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT DEFICITS CURRENT ACCOUNT POSITION CURRENT ACCOUNT SURPLUS CURRENT ACCOUNT SURPLUSES DEBT BURDENS DEBT INTEREST DEBT LEVEL DEBT LEVELS DEBT RATIO DEBTS DEFLATION DEMAND FOR CREDIT DEPRECIATION DEPRECIATIONS DEPRESSION DEPRESSIONS DEVALUATION DEVELOPING COUNTRIES DISINFLATION DISTRIBUTIONAL EFFECTS DOMESTIC BANKING DOMESTIC CONSUMPTION ECONOMETRIC ESTIMATES ECONOMIC FORECASTING ECONOMIC OUTLOOK EFFECTIVE EXCHANGE RATE ELASTICITY EMERGING MARKETS EMERGING-MARKET EQUILIBRIUM EQUILIBRIUM LEVELS EQUITY INVESTMENT EURO ZONE EXCHANGE RATE EXCHANGE RATE ARRANGEMENTS EXCHANGE RATE BAND EXCHANGE RATE DEVALUATIONS EXCHANGE RATE FLOATS EXCHANGE RATE FLUCTUATIONS EXCHANGE RATE INTERVENTION EXCHANGE RATE INTERVENTIONS EXCHANGE RATE MISALIGNMENT EXCHANGE RATE MOVEMENTS EXCHANGE RATE POLICIES EXCHANGE RATE POLICY EXCHANGE RATE REGIMES EXCHANGE RATE STABILITY EXCHANGE RATES EXPANSIONARY FISCAL POLICY EXPANSIONARY POLICIES EXPENDITURES EXPLICIT EXCHANGE RATE EXPORT GOODS EXPORT MARKET EXPORT MARKETS EXPORT REVENUES EXPORTER EXPORTERS EXTERNAL BALANCE EXTERNAL COMPETITIVENESS EXTERNAL POSITION EXTERNAL POSITIONS EXTERNAL TRADE FINANCIAL ARCHITECTURE FINANCIAL CAPITAL FINANCIAL CENTRE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SYSTEMS FISCAL POLICIES FISCAL POLICY FIXED EXCHANGE RATES FLEXIBLE EXCHANGE RATE FLEXIBLE EXCHANGE RATE REGIME FLEXIBLE EXCHANGE RATES FLOATER FOREIGN ASSET FOREIGN ASSET POSITION FOREIGN ASSETS FOREIGN BORROWING FOREIGN CURRENCY FOREIGN CURRENCY DEBT FOREIGN CURRENCY REVENUES FOREIGN EXCHANGE FOREIGN EXCHANGE MARKET FOREIGN EXCHANGE RESERVES FOREIGN LIABILITIES FOREIGN LIABILITY FOREIGN RESERVES GLOBAL CURRENT ACCOUNT IMBALANCES GLOBAL IMBALANCES GLOBAL OUTPUT GLOBAL TRADE GOLD GOLD STANDARD GOVERNMENT CONSUMPTION GROWTH RATE HIGH INFLATION HISTORY OF EXCHANGE RATE HOLDING IMPORTS INDUSTRIAL COUNTRIES INFLATION INFLATION FORECASTS INFLATION RATE INFLATION RATES INSTRUMENT INTEREST RATE INTEREST RATE DIFFERENTIALS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL INVESTORS INTERNATIONAL MONETARY SYSTEM INTERNATIONAL MONEY INTERNATIONAL TRADE LIQUIDATION LIQUIDITY LOCAL CURRENCY LOSS OF COMPETITIVENESS MACROECONOMIC POLICY MARKET COMPETITION MARKET COUNTRIES MARKET EXPECTATIONS MARKET FORCES MARKET PRESSURE MARKET SHARE MISALIGNMENTS MONETARY EXPANSION MONETARY POLICIES MONETARY POLICY NOMINAL EXCHANGE RATE NOMINAL EXCHANGE RATES NOMINAL INTEREST RATE OPEN ECONOMIES OUTPUT OUTPUT DECLINE OVERVALUATION PEG POLICY RESPONSES POLITICAL CONSIDERATIONS POLITICAL ECONOMY POSITIVE EXTERNALITIES POVERTY REDUCTION PROTECTIONISM PUBLIC DEBT REAL EXCHANGE RATE REAL EXCHANGE RATE MISALIGNMENTS REAL EXCHANGE RATES REAL INTEREST REAL INTEREST RATES RECESSION REPAYMENT RESERVE ROBUSTNESS CHECK SEIZURE SLOWDOWN SMALL COUNTRIES STANDARD DEVIATIONS SURPLUS COUNTRIES SURPLUSES TOTAL EXPORTS TOTAL OUTPUT TRADABLE GOOD TRADE BALANCE TRADE PATTERN TRADE PATTERNS TRADE PROTECTION TRADE SHARES TRADE SURPLUSES TRADING TRADING PARTNERS TRANSACTION UNCERTAINTY VOLATILITY VOLATILITY IN EXCHANGE RATE WEIGHTS WORLD MARKET Nearly two years after the onset of the financial crises, many central banks have brought their policy interest rates down to, or close to zero. Various governments have seen their budget deficits soar. Both policies have affected exchange rates, partly through market expectations. With a majority of exchange rates officially floating, exchange rate movements do not necessarily reflect official decisions as was the case in the 1930s. Yet, also in the 2008 crisis, authorities have directly intervened in the foreign exchange market, sometimes in order to defend a falling currency but in other instances with the aim to limit appreciation pressure, akin of competitive devaluations. This paper documents the exchange rate interventions during the height of the 2008/09 financial crisis and identifies the countries which have particular high incentives to intervene in the foreign exchange market to competitively devalue their currency. While various countries had increased incentives to devalue, we find that direct exchange rate interventions have been rather limited and contagion of devaluation has been restricted to one regionally contained case. However, sharp market-driven exchange rate movements have reshaped competitive positions. It appears that these movements have so far not seriously disrupted global trade. After all, a world crisis is likely to require widespread exchange rate adjustments as different countries are affected in different ways and have different capacities to weather the shocks. 2012-03-19T19:12:36Z 2012-03-19T19:12:36Z 2009-09-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090921124246 http://hdl.handle.net/10986/4250 English Policy Research working paper ; no. WPS 5059 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |