CEPII, Recherche et Expertise sur l'economie mondiale
Euro-Dollar: Face-to-Face

Agnès Bénassy-Quéré
Sophie Béreau
Valérie Mignon

The financial crisis that began during the summer of 2007 accelerated the depreciation of the dollar. Has the dollar now fallen far enough for global disequilibria to be reabsorbed and for a reappreciation to take place? What do the two methods commonly used to determine medium- or long-term equilibrium exchange rates tell us? The results they give differ, but they both indicate that the dollar and the euro are overvalued in real effective terms. The two currencies should therefore depreciate in relation to other currencies. The abruptness of the dollar’s depreciation since summer 2007 might mean that the U.S. currency’s current weakness will be relatively short-lived. As for the euro, its depreciation against other currencies is countered by the fact that it forms the main alternative to the dollar.


 JEL : E52

Subscribe to La Lettre du CEPII with our RSS feed
La Lettre du CEPII
N° 279   June 2008

Full Text

BibTeX (with abstract),
plain text (with abstract),
RIS (with abstract)

 Fields of expertise

Money & Finance