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Status:
Draft -- Not Published
Will be live at 10/21/2021 07:41
Global Macro Views: In Defense of Currency Devaluations
October 21, 2021
Large currency devaluations have a decidedly bad name, …
because they tend to be associated with chaos and disruption, …
even as the “dominant currency paradigm” clouds the lift to exports.
With EM currencies under continued pressure since COVID began in 2020, …
we update our earlier work on large devaluations and their impact on exports.
We survey all real and sustained devaluations in excess of 20 percent since 1980.
On average, export volumes receive a substantial boost across these episodes, …
while import volumes fall sharply early on, helping rebalance the current account.
As EM struggles to boost growth, currency devaluations are part of the solution.
IIF102121_GMV
(221 KB)
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Categories
Research
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Global Focus
,
Global Macro Views
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EM FX Fair Value
IIF Authors
Robin Brooks
Managing Director and Chief Economist
rbrooks@iif.com
Jonathan Fortun
Economist
jfortun@iif.com
Jonathan Pingle
Senior Program Assistant
jpingle@iif.com