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Estimates of Fundamental Equilibrium Exchange Rates, November 2013

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  • William R. Cline

    (Peterson Institute for International Economics)

Abstract

Since the previous estimates of fundamental equilibrium exchange rates (FEERs) in May 2013, numerous exchange rates have moved substantially in response to the US Federal Reserve's announcement that it would likely begin to "taper" its quantitative easing. Despite widespread concern that this "taper shock" has wreaked havoc in international capital and currency markets, exchange rate misalignments have tended to narrow in the past six months. Overvalued currencies have corrected downward in Turkey, South Africa, India, Indonesia, and even Australia. Medium-term surplus estimates have moderated in Taiwan, Sweden, Switzerland, and Japan, narrowing the extent of their undervaluations. Cases of large misalignments persist, however, with Singapore once again undervalued by 21 percent, New Zealand again overvalued by nearly 18 percent, and Turkey still overvalued by 18 percent despite some correction. The overvaluation of the dollar and undervaluation of the Chinese renminbi remain modest and no longer constitute the severe imbalances of 2006–07.

Suggested Citation

  • William R. Cline, 2013. "Estimates of Fundamental Equilibrium Exchange Rates, November 2013," Policy Briefs PB13-29, Peterson Institute for International Economics.
    • Handle: RePEc:iie:pbrief:pb13-29
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    References listed on IDEAS

    as
    1. William R. Cline, 2008. "Estimating Consistent Fundamental Equilibrium Exchange Rates," Working Paper Series WP08-6, Peterson Institute for International Economics.
    2. International Monetary Fund, 2013. "Germany: 2013 Article IV Consultation," IMF Staff Country Reports 2013/255, International Monetary Fund.
    3. William R. Cline & John Williamson, 2012. "Estimates of Fundamental Equilibrium Exchange Rates, May 2012," Policy Briefs PB12-14, Peterson Institute for International Economics.
    4. William R. Cline & John Williamson, 2011. "Estimates of Fundamental Equilibrium Exchange Rates, May 2011," Policy Briefs PB11-5, Peterson Institute for International Economics.
    5. William R. Cline, 2013. "Estimates of Fundamental Equilibrium Exchange Rates, May 2013," Policy Briefs PB13-15, Peterson Institute for International Economics.
    6. International Monetary Fund, 2013. "Japan: 2013 Article IV Consultation," IMF Staff Country Reports 2013/253, International Monetary Fund.
    7. William R. Cline & John Williamson, 2008. "New Estimates of Fundamental Equilibrium Exchange Rates," Policy Briefs PB08-7, Peterson Institute for International Economics.
    8. William R. Cline, 2005. "United States as a Debtor Nation, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 3993, January.
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    Cited by:

    1. Gary W. Williams & Ji Luo, 2017. "Exchange Rate Policy and Global Supply Chains: The Case of the Chinese Renminbi and Global Soybean and Soybean Product Markets," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 39(1), pages 177-198.
    2. Yin-Wong Cheung & Shi He, 2019. "Truths and Myths About RMB Misalignment: A Meta-analysis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(3), pages 464-492, September.
    3. Banerjee, Krittika & Goyal, Ashima, 2021. "Behavioural​ equilibrium real exchange rates and misalignments: Evidence from large emerging markets," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 414-436.
    4. William R. Cline, 2014. "Estimates of Fundamental Equilibrium Exchange Rates, May 2014," Policy Briefs PB14-16, Peterson Institute for International Economics.
    5. MASUJIMA Yuki, 2015. "Assessing Asian Equilibrium Exchange Rates as Policy Instruments," Discussion papers 15038, Research Institute of Economy, Trade and Industry (RIETI).
    6. Joseph E. Gagnon, 2014. "Alternatives to Currency Manipulation: What Switzerland, Singapore, and Hong Kong Can Do," Policy Briefs PB14-17, Peterson Institute for International Economics.
    7. Luo, Ji & Williams, Gary W., 2015. "The Impacts of Chinese Exchange Rate Policy on World Soybean and Products Markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205075, Agricultural and Applied Economics Association.
    8. William R. Cline, 2014. "Estimates of Fundamental Equilibrium Exchange Rates, November 2014," Policy Briefs PB14-25, Peterson Institute for International Economics.
    9. William R. Cline, 2015. "Estimates of Fundamental Equilibrium Exchange Rates, November 2015," Policy Briefs PB15-20, Peterson Institute for International Economics.
    10. Nicholas R. Lardy & Nicholas Borst, 2013. "A Blueprint for Rebalancing the Chinese Economy," Policy Briefs PB13-2, Peterson Institute for International Economics.
    11. Caroline Freund, 2014. "Rethinking the National Export Initiative," Policy Briefs PB14-7, Peterson Institute for International Economics.
    12. Juan Carlos Martinez Oliva, 2014. "Moving Towards Monetary Integration in East Asia: Achieving Economic Convergence in a Game-Theory Framework," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-24.
    13. Jose De Gregorio, 2015. "From Rapid Recovery to Slowdown: Why Recent Economic Growth in Latin America Has Been Slow," Policy Briefs PB15-6, Peterson Institute for International Economics.
    14. Kam Szeto & David Oxley, 2014. "Examining the Elasticity of New Zealand’s Current Account to the Real Exchange Rate," Treasury Working Paper Series 14/12, New Zealand Treasury.
    15. C. Fred Bergsten, 2014. "Addressing Currency Manipulation Through Trade Agreements," Policy Briefs PB14-2, Peterson Institute for International Economics.

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