International Currency Exposure

by Yin-Wong Cheung (Editor), Frank Westermann (Editor)

Overview

Issues in debates about foreign currency exposure—the denomination of liabilities or assets in foreign currency.

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

Product Details

ISBN-13:	9780262340939
Publisher:	MIT Press
Publication date:	07/14/2017
Series:	CESifo Seminar Series
Sold by:	Penguin Random House Publisher Services
Format:	eBook
Pages:	328
File size:	9 MB
Age Range:	18 Years

About the Author

Yin-Wong Cheung is Hung Hing Ying Chair Professor of International Economics and Director of the Global Research Unit at City University of Hong Kong.

Frank Westermann is Professor of Economics and Director of the Institute of Empirical Economic Research at Osnabrueck University, Germany.

Paul De Grauwe is Professor of Economics at the Catholic University of Leuven, the author of The Economics of Monetary Union, and the editor of three previous books in the CESifo Seminar series.

Peter M. Garber is Global Strategist at Global Markets Research of Deutsche Bank.

Table of Contents

Series Foreword vii

Introduction 1

1 Toward a Behavioral Theory of the Exchange Rate Paul De Grauwe 11

2 Cross-Country Exposures to the Swiss Franc Agustín S. Bénétrix Philip R. Lane 37

3 On the Roles of Different Foreign Currencies in European Bank Lending Signe Krogstrup Cédric Tille 67

4 Understanding Exchange Rate Exposure through Net Foreign Exchange Position Channel Fatih Altunok Huseyin Aytug Arif Oduncu 95

5 Strategic Currency Choice in International Trade Maria V. Sokolova 129

6 Probability of a Currency Crash and Postcrash Output Performance: Do Exchange Rate Regimes Matter? Juann H. Hung 167

7 Foreign Currency Denominated Assets and International Shock Absorption in Europe and East Asia Gunther Schnabl 211

8 External Debt and International Trade: Another Mismatch Eiji Fujii 241

9 Assessing the Forward Premium Puzzle: A Factor-Augmented Panel Data Approach Jörg Breitung Katja Mann 265

10 The Geopolitics of Ascending Global Currencies Peter Garber 289

Contributors 297

Index 299