Equilibrium exchange rate

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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.

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Of course, all things are not equal, so another interpretation is that the current equilibrium exchange rates will decline further, reflecting the markets pessimism about the UK economys supply-side outlook and future productivity growth.

What is the pound telling us?

estimates of the equilibrium exchange rates for a number of countries,

China's currency policy: an analysis of the economic issues

Williamson, "2009 Estimates of Fundamental Equilibrium Exchange Rates", Peterson Institute for International Economics Policy Brief 09-10 (Washington, DC: Peterson Institute for International Economics, June 2009); and "Estimates of Fundamental Equilibrium Exchange Rates, May 2010", Peterson Institute for International Economics Policy Brief 10-15 (Washington, DC: Peterson Institute for International Economics, June 2010); and W.R.

The Chinese currency and global rebalancing: a discussion

Williamson (2012) "Estimates of Fundamental Equilibrium Exchange Rates," May 2012, Peterson Institute Working Paper.

Welcome to the currency war scorecard: charting potential winners and losers

Most people who are deranged enough to consider the very social science of estimating equilibrium exchange rates conclude that the "fair value" for the Euro against the Dollar is around 1.20.

Is the Euro Finally Ready to Decline to Fair Value and Beyond?

Indeed, the method of using the magnitude of the surplus/deficit to derive equilibrium exchange rates was pioneered by John Williamson (1994) in the mid-1990s and termed the 'Fundamental Exchange Rate Equilibrium' or FEER.

Euro and the yuan: different peas in the same pod

Taiwan's Council for Economic Planning and Development (CEPD) says 'PPP' is a theory of long-term equilibrium exchange rates based on relative price levels of two countries.

Taiwan's PPP-based per-capita GDP to exceed Japan's this year

"Exchange Rate Regimes and Equilibrium Exchange Rates in East Asia." Revue Economique, 54(5): 1161-82.

Is China's exchange rate policy a form of trade protection?

The estimates of equilibrium exchange rates obtained in this round are more favourable than those from the two earlier (normalised) SRER estimates in Bulff and Smidkowa (2005) and (2007), see figure 4.

Sustainable exchange rates when trade winds are plentiful

First, most of these countries are in the process of entering the euro zone, and they therefore need an estimate of equilibrium exchange rates prior to a permanent link to the euro.

Do real exchange rates follow a nonlinear mean reverting process in developing countries?

(1994) Estimating Equilibrium Exchange Rates. Washington: Institute of International Economics.

Economic development and the role of currency undervaluation

The difference between these behavioural equilibrium exchange rates become more pronounced when the degree of currency misalignment is determined.

The real equilibrium South African rand/US dollar exchange rate: a comparison of alternative measures