Exchange Rates during the Crisis

Weber, Sebastian; Wyplosz, Charles

dc.creator	Weber, Sebastian
dc.creator	Wyplosz, Charles
dc.date	2012-03-19T19:12:36Z
dc.date	2012-03-19T19:12:36Z
dc.date	2009-09-01
dc.date.accessioned	2023-02-18T19:37:28Z
dc.date.available	2023-02-18T19:37:28Z
dc.identifier	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
dc.identifier	http://hdl.handle.net/10986/4250
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/249750
dc.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.
dc.language	English
dc.relation	Policy Research working paper ; no. WPS 5059
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	BANKING SYSTEMS
dc.subject	BLACK MARKETS
dc.subject	BUDGET DEFICITS
dc.subject	BUFFER
dc.subject	CAPITAL ACCOUNT
dc.subject	CAPITAL CONTROLS
dc.subject	CAPITAL FLIGHT
dc.subject	CAPITAL MOVEMENTS
dc.subject	CAPITAL OUTFLOW
dc.subject	CENTRAL BANK
dc.subject	CENTRAL BANK POLICY
dc.subject	CENTRAL BANKS
dc.subject	COMMODITY
dc.subject	COMPETITIVE DEVALUATIONS
dc.subject	COMPETITIVE EXCHANGE RATE
dc.subject	COMPETITIVE EXCHANGE RATES
dc.subject	COMPETITIVENESS
dc.subject	COMPLEX INSTRUMENT
dc.subject	CONVENTIONAL INSTRUMENT
dc.subject	CREDIT EXPANSION
dc.subject	CREDIT FACILITY
dc.subject	CURRENCY
dc.subject	CURRENCY EARNINGS
dc.subject	CURRENCY PEG
dc.subject	CURRENT ACCOUNT
dc.subject	CURRENT ACCOUNT BALANCE
dc.subject	CURRENT ACCOUNT DEFICIT
dc.subject	CURRENT ACCOUNT DEFICITS
dc.subject	CURRENT ACCOUNT POSITION
dc.subject	CURRENT ACCOUNT SURPLUS
dc.subject	CURRENT ACCOUNT SURPLUSES
dc.subject	DEBT BURDENS
dc.subject	DEBT INTEREST
dc.subject	DEBT LEVEL
dc.subject	DEBT LEVELS
dc.subject	DEBT RATIO
dc.subject	DEBTS
dc.subject	DEFLATION
dc.subject	DEMAND FOR CREDIT
dc.subject	DEPRECIATION
dc.subject	DEPRECIATIONS
dc.subject	DEPRESSION
dc.subject	DEPRESSIONS
dc.subject	DEVALUATION
dc.subject	DEVELOPING COUNTRIES
dc.subject	DISINFLATION
dc.subject	DISTRIBUTIONAL EFFECTS
dc.subject	DOMESTIC BANKING
dc.subject	DOMESTIC CONSUMPTION
dc.subject	ECONOMETRIC ESTIMATES
dc.subject	ECONOMIC FORECASTING
dc.subject	ECONOMIC OUTLOOK
dc.subject	EFFECTIVE EXCHANGE RATE
dc.subject	ELASTICITY
dc.subject	EMERGING MARKETS
dc.subject	EMERGING-MARKET
dc.subject	EQUILIBRIUM
dc.subject	EQUILIBRIUM LEVELS
dc.subject	EQUITY INVESTMENT
dc.subject	EURO ZONE
dc.subject	EXCHANGE RATE
dc.subject	EXCHANGE RATE ARRANGEMENTS
dc.subject	EXCHANGE RATE BAND
dc.subject	EXCHANGE RATE DEVALUATIONS
dc.subject	EXCHANGE RATE FLOATS
dc.subject	EXCHANGE RATE FLUCTUATIONS
dc.subject	EXCHANGE RATE INTERVENTION
dc.subject	EXCHANGE RATE INTERVENTIONS
dc.subject	EXCHANGE RATE MISALIGNMENT
dc.subject	EXCHANGE RATE MOVEMENTS
dc.subject	EXCHANGE RATE POLICIES
dc.subject	EXCHANGE RATE POLICY
dc.subject	EXCHANGE RATE REGIMES
dc.subject	EXCHANGE RATE STABILITY
dc.subject	EXCHANGE RATES
dc.subject	EXPANSIONARY FISCAL POLICY
dc.subject	EXPANSIONARY POLICIES
dc.subject	EXPENDITURES
dc.subject	EXPLICIT EXCHANGE RATE
dc.subject	EXPORT GOODS
dc.subject	EXPORT MARKET
dc.subject	EXPORT MARKETS
dc.subject	EXPORT REVENUES
dc.subject	EXPORTER
dc.subject	EXPORTERS
dc.subject	EXTERNAL BALANCE
dc.subject	EXTERNAL COMPETITIVENESS
dc.subject	EXTERNAL POSITION
dc.subject	EXTERNAL POSITIONS
dc.subject	EXTERNAL TRADE
dc.subject	FINANCIAL ARCHITECTURE
dc.subject	FINANCIAL CAPITAL
dc.subject	FINANCIAL CENTRE
dc.subject	FINANCIAL CRISES
dc.subject	FINANCIAL CRISIS
dc.subject	FINANCIAL MARKET
dc.subject	FINANCIAL MARKETS
dc.subject	FINANCIAL SECTOR
dc.subject	FINANCIAL SYSTEMS
dc.subject	FISCAL POLICIES
dc.subject	FISCAL POLICY
dc.subject	FIXED EXCHANGE RATES
dc.subject	FLEXIBLE EXCHANGE RATE
dc.subject	FLEXIBLE EXCHANGE RATE REGIME
dc.subject	FLEXIBLE EXCHANGE RATES
dc.subject	FLOATER
dc.subject	FOREIGN ASSET
dc.subject	FOREIGN ASSET POSITION
dc.subject	FOREIGN ASSETS
dc.subject	FOREIGN BORROWING
dc.subject	FOREIGN CURRENCY
dc.subject	FOREIGN CURRENCY DEBT
dc.subject	FOREIGN CURRENCY REVENUES
dc.subject	FOREIGN EXCHANGE
dc.subject	FOREIGN EXCHANGE MARKET
dc.subject	FOREIGN EXCHANGE RESERVES
dc.subject	FOREIGN LIABILITIES
dc.subject	FOREIGN LIABILITY
dc.subject	FOREIGN RESERVES
dc.subject	GLOBAL CURRENT ACCOUNT IMBALANCES
dc.subject	GLOBAL IMBALANCES
dc.subject	GLOBAL OUTPUT
dc.subject	GLOBAL TRADE
dc.subject	GOLD
dc.subject	GOLD STANDARD
dc.subject	GOVERNMENT CONSUMPTION
dc.subject	GROWTH RATE
dc.subject	HIGH INFLATION
dc.subject	HISTORY OF EXCHANGE RATE
dc.subject	HOLDING
dc.subject	IMPORTS
dc.subject	INDUSTRIAL COUNTRIES
dc.subject	INFLATION
dc.subject	INFLATION FORECASTS
dc.subject	INFLATION RATE
dc.subject	INFLATION RATES
dc.subject	INSTRUMENT
dc.subject	INTEREST RATE
dc.subject	INTEREST RATE DIFFERENTIALS
dc.subject	INTEREST RATES
dc.subject	INTERNATIONAL BANK
dc.subject	INTERNATIONAL INVESTORS
dc.subject	INTERNATIONAL MONETARY SYSTEM
dc.subject	INTERNATIONAL MONEY
dc.subject	INTERNATIONAL TRADE
dc.subject	LIQUIDATION
dc.subject	LIQUIDITY
dc.subject	LOCAL CURRENCY
dc.subject	LOSS OF COMPETITIVENESS
dc.subject	MACROECONOMIC POLICY
dc.subject	MARKET COMPETITION
dc.subject	MARKET COUNTRIES
dc.subject	MARKET EXPECTATIONS
dc.subject	MARKET FORCES
dc.subject	MARKET PRESSURE
dc.subject	MARKET SHARE
dc.subject	MISALIGNMENTS
dc.subject	MONETARY EXPANSION
dc.subject	MONETARY POLICIES
dc.subject	MONETARY POLICY
dc.subject	NOMINAL EXCHANGE RATE
dc.subject	NOMINAL EXCHANGE RATES
dc.subject	NOMINAL INTEREST RATE
dc.subject	OPEN ECONOMIES
dc.subject	OUTPUT
dc.subject	OUTPUT DECLINE
dc.subject	OVERVALUATION
dc.subject	PEG
dc.subject	POLICY RESPONSES
dc.subject	POLITICAL CONSIDERATIONS
dc.subject	POLITICAL ECONOMY
dc.subject	POSITIVE EXTERNALITIES
dc.subject	POVERTY REDUCTION
dc.subject	PROTECTIONISM
dc.subject	PUBLIC DEBT
dc.subject	REAL EXCHANGE RATE
dc.subject	REAL EXCHANGE RATE MISALIGNMENTS
dc.subject	REAL EXCHANGE RATES
dc.subject	REAL INTEREST
dc.subject	REAL INTEREST RATES
dc.subject	RECESSION
dc.subject	REPAYMENT
dc.subject	RESERVE
dc.subject	ROBUSTNESS CHECK
dc.subject	SEIZURE
dc.subject	SLOWDOWN
dc.subject	SMALL COUNTRIES
dc.subject	STANDARD DEVIATIONS
dc.subject	SURPLUS COUNTRIES
dc.subject	SURPLUSES
dc.subject	TOTAL EXPORTS
dc.subject	TOTAL OUTPUT
dc.subject	TRADABLE GOOD
dc.subject	TRADE BALANCE
dc.subject	TRADE PATTERN
dc.subject	TRADE PATTERNS
dc.subject	TRADE PROTECTION
dc.subject	TRADE SHARES
dc.subject	TRADE SURPLUSES
dc.subject	TRADING
dc.subject	TRADING PARTNERS
dc.subject	TRANSACTION
dc.subject	UNCERTAINTY
dc.subject	VOLATILITY
dc.subject	VOLATILITY IN EXCHANGE RATE
dc.subject	WEIGHTS
dc.subject	WORLD MARKET
dc.title	Exchange Rates during the Crisis
dc.type	Publications & Research :: Policy Research Working Paper
dc.coverage	The World Region
dc.coverage	The World Region