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 ?
This is one reason behind our view that the krona's equilibrium exchange rate against the euro has weakened.
So we pondered greatly on understanding inflation, inflation dynamics, the transmission mechanism, the elusive figure of the equilibrium exchange rate and the dynamics of the FX market, the costs of being behind the curve or in front of it, structural changes that may affect pricing power and dynamics, the power or lack thereof of words and other open mouth operations are amongst the many issues we debated.
It applies the concept of an equilibrium exchange rate for a recent dataset of African countries which is unique regarding this methodological application.
These models include Goldman Sachss Dynamic Equilibrium Exchange Rate and the Peterson Institute for International Economics Fundamental Equilibrium Exchange Rate.
In this case, the downward jump in the exchange rate may reflect a lower equilibrium exchange rate as exit from the EU may imply some diversification away from high-value financial services and a negative terms of trade shock as there are increased overall costs of trade in both goods and services sectors.
After all, with the Chinese economy undergoing wholesale economic transformation, estimating a long-term equilibrium exchange rate that will anchor speculation is virtually impossible, particularly given persistent doubts about data quality, disclosure, and opaque policymaking processes.
When these parameters approach infinity, however, relative inflation and the equilibrium exchange rate are constant.
The speed of adjustment coefficient indicates that 17 percent of divergence from long-run equilibrium exchange rate path is being corrected in each quarter.
Keblowski and Welfe (2011) propose a new modelling of exchange rate that extends the capital enhanced equilibrium exchange rate (CHEER) model, which is the combination of the PPP and UIP.
medium-term equilibrium exchange rate relative to the U.S.
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.

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