Occasional Papers

Methodology for Current Account and Exchange Rate Assessments

By G. Russell Kincaid, Martin Fetherston, Peter Isard, Hamid Faruqee

December 28, 2001

Preview Citation

Format: Chicago

G. Russell Kincaid, Martin Fetherston, Peter Isard, and Hamid Faruqee. Methodology for Current Account and Exchange Rate Assessments, (USA: International Monetary Fund, 2001) accessed November 23, 2024

Summary

This chapter reports on Coordinating Group on Exchange Rate Issues’ (CGER) works and provides perspectives on alternative frameworks for assessing exchange rates and the rationale for CGER's general approach. The primary motivation for the work of the CGER is to identify cases where exchange rates appear to be substantially out of line with medium-run macroeconomic fundamentals. It is recognized that such situations can have different interpretations, depending on the cyclical positions of economies and other circumstances. The assessments of exchange rates among industrial country currencies rely primarily on an application of a macroeconomic balance framework. This framework focuses on the extent to which the current account positions associated with prevailing exchange rates are consistent with medium-run fundamentals. Substantial discrepancies between exchange rates and their medium-run equilibrium levels, when they emerge, raise two different, however, related issues for the IMF to address in its exercise of bilateral and multilateral Surveillance.

Subject: Balance of payments, Current account, Emerging and frontier financial markets, Exchange rate adjustments, Exchange rates, Financial markets, Foreign exchange, Real exchange rates

Keywords: Area department, CGER, Current account, Current account position, Emerging and frontier financial markets, Exchange rate, Exchange rate adjustments, Exchange rate position, Exchange rates, Global, IMF's executive board, Investment, OP, Real exchange rates, Saving-investment balance

Publication Details

  • Pages:

    39

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Occasional Paper No. 2001/006

  • Stock No:

    S209EA0000000

  • ISBN:

    9781589060814

  • ISSN:

    0251-6365

Supplemental Resources

You May Also Be Interested In...

Remittances in Times of Uncertainty: Understanding the Dynamics and Implications

November 22, 2024

Bilateral Trade in Services and Exchange Rates: Evidence of Dominant Currency Pricing

November 22, 2024

The Fund's Income Position for FY 2024--Actual Outcome

November 21, 2024

Fourteenth Periodic Monitoring Report On The Status Of Management Implementation Plans In Response To Board-Endorsed IEO Recommendations

November 21, 2024