• The euro has been very strong this year (appreciating over 10% YtD against the dollar)
• Fair value (measured using PPP) is 1.33, suggesting the EURUSD pair is still around 15% undervalued
• In this blog post we use a FEER (Fundamental Equilibrium Exchange Rate) framework to investigate what level exchange rate is consistent with a sustainable balance of payments. Our results are broadly consistent with PPP valuations, and suggest that there is a risk of further euro appreciation to come
In light of the currency board arrangement which pegs the HKD to the USD at a level of 7.80, the Hong Kong dollar’s decline this year represents a sizeable exchange rate move.
In this blog post we investigate the causes and discuss the implications for the Hong Kong Monetary Authority’s currency arrangement.
The Bank of England’s chief economist Andy Haldane suggested recently that changes in labour market structure in the UK have led to a flattening of the Phillips Curve
In this blog, we discuss the plausibility of this argument applied to a global context over a longer time horizon
This year the RMB has bucked its recent trend and remained broadly stable against the US dollar for the first half of 2017. As the US dollar retraces, the RMB has softened against its main trade partners.
For Policymakers, this is a convenient outcome, though there exists a delicate balance to maintain and the recent change to the PBoC’s fixing mechanism looks to be a reflection of this.
Does the collapse in the participation rate represent slack, or just demographics? How many can be brought back in to the labour force? We present a detailed dissection of the American population ‘not in employment’, and the reality of getting them back to work.