Status: Draft -- Not PublishedWill be live at 10/21/2021 07:41
Global Macro Views: In Defense of Currency Devaluations
- Large currency devaluations have a decidedly bad name, …
- because they tend to be associated with chaos and disruption, …
- even as the “dominant currency paradigm” clouds the lift to exports.
- With EM currencies under continued pressure since COVID began in 2020, …
- we update our earlier work on large devaluations and their impact on exports.
- We survey all real and sustained devaluations in excess of 20 percent since 1980.
- On average, export volumes receive a substantial boost across these episodes, …
- while import volumes fall sharply early on, helping rebalance the current account.
- As EM struggles to boost growth, currency devaluations are part of the solution.
