International Currency Exposure

Yin-Wong Cheung, Frank Westermann, Clemens Fuest

• Publisher: The MIT Press
• Year: 2017
• Topic: Economics
• eBook ISBN:
  9780262340939
• Subtopic: Finance
• Index: Economics

The foreign currency denomination of contracts in international transactions can lead to international currency exposure at the country level with important economic and policy implications. When debts are denominated in foreign currency and revenues in domestic currency, exchange rate fluctuations can result in balance sheet effects for countries with either net asset or liability positions. Moreover, currency mismatch between assets and liabilities can be a cause for crises in developing and emerging economies. This book looks at the issues surrounding foreign currency exposure in today's increasingly integrated world economy.

The contributors draw on cross-country as well as country-specific data. They consider international currency risk after the Swiss franc ended its one-sided peg with the euro, for example, and the foreign exchange positions of firms in Turkey and Russia. Other contributors take macroeconomic perspectives, examining the potential effects of exchange rate realignment, the pressure to appreciate on countries with current account surpluses, and the currency exposure in international trade. Finally, contributors consider the issue from finance and political economy perspectives, addressing the phenomenon of the forward premium puzzle and discussing geopolitical aspects ascending currencies.

Contributors
Fatih Altunok, Huseyin Aytug, Agustín S. Bénétrix, Jörg Breitung, Paul De Grauwe, Eiji Fujii, Peter Garber, Juann H. Hung, Signe Krogstrup, Philip R. Lane, Katja Mann, Arif Oduncu, Gunther Schnabl, Maria V. Sokolova, Cédric Tille

Table of contents

• Cover
• Series page
• Title page
• Copyright page
• Table of Contents
• Series Foreword
• Introduction
• 1 Toward a Behavioral Theory of the Exchange Rate
• 2 Cross-Country Exposures to the Swiss Franc
• 3 On the Roles of Different Foreign Currencies in European Bank Lending
• 4 Understanding Exchange Rate Exposure through Net Foreign Exchange Position Channel
• 5 Strategic Currency Choice in International Trade
• 6 Probability of a Currency Crash and Postcrash Output Performance: Do Exchange Rate Regimes Matter?
• 7 Foreign Currency Denominated Assets and International Shock Absorption in Europe and East Asia
• 8 External Debt and International Trade: Another Mismatch
• 9 Assessing the Forward Premium Puzzle: A Factor-Augmented Panel Data Approach
• 10 The Geopolitics of Ascending Global Currencies
• Contributors
• Index