Direct Exchange Rate

Direct Exchange Rate

The home currency price of one unit of a foreign currency.
References in periodicals archive ?
The move is crucial for the formation of a direct exchange rate between the RMB and Singapore dollar.
Americans, laboring under the exchange-rate cum trade-balance fallacy and their large trade deficit, complain that foreign governments manipulate their dollar' exchange rates unfairly to secure a mercantile advantage--while the rules of the dollar standard game leave the United States with no direct exchange rate policy of its own.
At the banking sector level, the well-capitalized sector with little direct exchange rate exposure and primarily local deposit funding, together with long foreign currency positions, allowed Turkey to withstand the recent global deleveraging and economic crisis and exchange rate fluctuations.
Bergin and Lin find that currency unions and direct exchange rate pegs raise trade through distinct channels.
The existence of a direct exchange rate channel in the Phillips Curve or the aggregate supply curve has far-reaching implications for the conduct of monetary policy in the open-economy.
In a backward-looking model for an open economy, Ball (1999) shows that the direct exchange rate channel in the Phillips Curve matters in the setting of optimal policy.
The role of a direct exchange rate effect has been investigated mainly from a theoretical perspective in the literature.
This would normally be achieved either by an abnormally low inflation rate or a direct exchange rate movement.
The purpose of this paper is to show that under strict inflation targeting the existence of a direct exchange rate channel in the Phillips Curve invalidates the interpretation of conventional MCIs as indicating the ease or tightness of monetary conditions.
Under a regime of strict inflation targeting, conventional MCIs are unreliable indicator variables or operating targets if there is a direct exchange rate effect on the rate of inflation in the Phillips Curve.
Notice that in case the direct exchange rate effect in the Phillips Curve is absent, the MCI reduces to the conventional specification, the case where the relative weight on the real exchange rate equals [delta]/[beta].
Many systems in use today have sophisticated multicurrency capabilities that use direct exchange rates between currencies to perform conversions.