That’s a title of an article by Christopher Condon, in Bloomberg a few days ago. What’s the evidence? Figure 1 shows the typically referenced CPI deflated trade weighted dollar.
Category Archives: exchange rates
VoxEU: “The Russian sanctions and dollar foreign exchange reserves”
From a VoxEU article today, by Robert N. McCauley with Hiro Ito and Menzie Chinn:
Will the freezing of the Bank of Russia’s foreign exchange reserves undermine the dollar’s predominant role in official foreign exchange reserves? This column examines the aggregate evidence since end-2021 for any reduction in the dollar share of official foreign exchange reserves against a baseline constructed with data from 1999 through 2021. The observed dollar share in March 2024 differs little from the out-of-sample projection based on this baseline. On this showing, official reserve managers have not reduced the role of the dollar since the freeze of the Bank of Russia’s assets.
Exchange Rates and Interest Rates: Some Papers [updated to 7/15]
I’ve spent the last week seeing lots of presentations on macro and international finance. Of particular interest are some papers on interest rate parity:
Chinn, Frankel and Ito: “The Dollar versus the Euro as International Reserve Currencies”
The abstract from article (free access to August 11) forthcoming in the Journal of International Money and Finance [link to ungated working paper version]:
Eswar Prasad: “Top Dollar”
From a just-published article in Foreign Affairs:
News Impact Illustrated: Jobs, CPI, PPI Releases
Following up on the PPI release (discussed along with other core measures) discussed here, how have markets responded, in terms of Fed funds futures, the ten year rate?
Day 2 Third Conference on the International Roles of the U.S. Dollar
The program continued on from yesterday (full agenda here). Sessions included papers on theoretical modeling of CIP deviations, the effect of swap line announcements on asset prices gleaned from high frequency data and new data on over the counter fx transactions. Once again a tremendous learning experience for me.
CNY Overtakes CAD in FX Trading, CB Reserve Holdings in 2022
Talking about the dollar as an reserve currency next week [2], and noticed these interesting trends.
Import Prices Surprise
The index came in at +0.9% vs. +0.2% m/m.
Maury Obstfeld: “Trump’s plans for the Fed and the dollar are a one-way ticket back to the inflationary chaos of the 1970s.”
Maury Obstfeld at PS says it better than I ever did (along with the best graphic *ever*):
