Equilibrium exchange rate

Equilibrium exchange rate

Exchange rate at which demand for a currency is equal to the supply of the currency in the economy.

Equilibrium Exchange Rate

The exchange rate at which the demand for a currency and supply of the same currency are equal. The equilibrium exchange rate indicates that the price of exchanging two currencies will remain stable. See also: Equilibrium rate of interest.
References in periodicals archive ?
The speed of adjustment coefficient indicates that 17 percent of divergence from long-run equilibrium exchange rate path is being corrected in each quarter.
The studies are grounded on one of the approaches that seeks to determine the value of a currency, commonly referred to as the fundamental equilibrium exchange rate method.
Over- or under-valuation compared to the fundamental equilibrium exchange rate (FEER): We used numbers provided by Bill Cline and John Williamson of the Peterson Institute.
While the rial's equilibrium exchange rate was due for a substantial correction and for a long time, the plunge would not have occurred without a catalyst.
That shows that the renminbi exchange rate may possibly have reached an equilibrium exchange rate," said Wen, the country's top economic official.
This implies that only the real exchange rate is increasing in value while the equilibrium exchange rate is either unchanged or not increasing as much.
Similarly, [zeta] is long-run equilibrium exchange rate.
magnitude of B-S effects raising equilibrium inflation rates, uncertainties over potential GDP levels and their changes over time)- Difficulty of ex ante pinpointing (unmodified) central parity while equilibrium exchange rate may undergo substantial shifts
Following an overview of key issues, chapters discuss monetary policy independence, the currency regime, and the capital account in China; imbalances in China's growth; estimates of the equilibrium exchange rate of the renminbi; the management of China's international reserves; the US Congress and the Chinese renminbi; the influence of the renminbi on the exchange rate policies of other Asian countries; and International Monetary Fund surveillance over China's exchange rate policy.
Many economists prefer to consider what they call a fundamental equilibrium exchange rate, or FEER.
If PPP does not hold well for these countries, then using PPP rates as an equilibrium exchange rate measure, as typically suggested in the literature, may not yield an appropriate exchange rate between these new European Union (EU) members and the euro.
The best way to bring about an equilibrium exchange rate is further reform.

Full browser ?