nominal exchange rate

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Nominal exchange rate

The actual foreign exchange quotation in contrast to the real exchange rate, which has been adjusted for changes in purchasing power.

Nominal Exchange Rate

The official quote of an exchange rate. For example, when one changes dollars for pounds, the bank lists an exchange rate of, say, two dollars for one pound. This is the nominal exchange rate. While this indicates the number of pounds one receives for a dollar (or vice versa), it does not show the purchasing power of the pound versus that of the dollar. See also: Real Exchange Rate.

nominal exchange rate

the EXCHANGE RATE of a currency expressed in current price terms, that is, making no allowance for the effects of INFLATION. Contrast REAL EXCHANGE RATE.
References in periodicals archive ?
On one hand, it could be the result of a highly negative correlation between nominal exchange rates and foreign prices.
These structural factors could not be affected by movements in nominal exchange rates.
Second, model-based criteria, based on the formal models of nominal exchange rates.
A vector autoregression (VAR) was employed to investigate the joint behavior of real and nominal exchange rates in order to identify the nominal and real shocks that caused fluctuations in the real exchange rate.
Some recent papers show not only that nominal exchange rates are less volatile in developing countries, but also that their international reserves and domestic interest rates are significantly more volatile (Calvo and Reinhart (2002), (2000), Hausmann, Panizza, and Stein (2001), Levy-Yeyati and Sturzenegger (2002)).
Because sterilized intervention does not affect exchange rate fundaments, it offers an extremely weak lever with which nominal exchange rates can be nudged along a market-determined path.
manufactured goods depends not on the behavior of nominal exchange rates, but on movements in nominal exchange rates relative to prices.
That is, real and nominal exchange rates are about six times more volatile than relative price levels and both are highly persistent, with first-order serial correlations of about 0.
The paper undertakes an extensive examination of the behaviour of the Norwegian real and nominal exchange rates and shows that it is remarkably consistent with the PPP theory.
2) There is also an ongoing discussion on whether or not nominal exchange rates in deregulated financial markets move in an equilibrating fashion in the case of asymmetric shocks.
To avoid estimation problems arising from this correlation, Equation 4 may have to be estimated in terms of nominal exchange rates if the variable lnPD is included in the cointegrating equation.
consumer prices to foreign consumer prices translated into dollars at current nominal exchange rates (chart 4).