Points clés :
- Despite the large shock that represented the Covid-19 pandemic, the global configuration of currency misalignments in 2020 did not undergo any significant changes
- The US dollar registered a slight increase of its overvaluation; the Chinese renminbi remained relatively stable and again appeared broadly in line with its fundamental value; the British pound, the Canadian dollar and the Japanese yen registered an upward movement that led to the reduction of the undervaluations
- The euro area is featured with various situations: Germany, Ireland and the Netherlands displayed undervaluations; Belgium, France, and Italy were close to their equilibrium; Austria, Greece, Portugal and Spain displayed overvaluations
- Europe is also characterized by a considerable heterogeneity with undervaluations prevailing in Northern countries (Norway, Sweden), overvaluations in Eastern and South Eastern countries and scattered cases of currency in line (e.g., the United Kingdom)
- Movements in the EMEs were very heterogenous; the Brazilian real plunged and settled at around 30% below its equilibrium value; the Turkish lira continued to fall hence increasing the undervaluation; the Korean won and the Indian rupee remained stable and maintained their moderate undervaluations; most emerging economies in Europe and South-East Asia experienced the opposite an upward movement (increase in overvaluations/reduction of undervaluations)
Résumé :This publication, accompanying the 2021’s update of EQCHANGE, aims at providing an overview of exchange rate misalignments for 2020. Overall, changes in currency misalignments during 2020 have been rather modest except few EMEs that registered important movements. Among advanced economies, the picture was broadly unchanged. The US dollar registered a slight increase of its overvaluation; the British pound, the Canadian dollar and the Japanese yen registered an upward movement that led to the reduction of the undervaluations. The euro area is again featured with various situations with undervaluations prevailing in Germany, Ireland and the Netherlands while Belgium, France, Italy were close to their equilibrium. In EMEs, the Brazilian real registered the largest swings against the US dollar and have consequently seen a dramatic increase of its undervaluation. The Turkish lira continued its plunge against the US dollar and also increased its undervaluation. In contrast, the Chinese renminbi remained relatively stable and appeared broadly in line with its fundamental value.
Mots-clés :
EQCHANGE | Exchange Rates | Currency Misalignments | Global Imbalances
JEL :
E3, E4, E5, E6, F3
CEPII Working Paper N°2021-13, December 2021
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