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Dominant Currencies and External Adjustment
Author:
Gustavo Adler
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Camila Casas null

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Mr. Luis M. Cubeddu
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Ms. Gita Gopinath
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Ms. Nan Li
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Sergii Meleshchuk null

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Ms. Carolina Osorio Buitron
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Mr. Damien Puy null

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Mr. Yannick Timmer
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Series:
Staff Discussion Notes
Volume/Issue:
Volume 2020: Issue 005
Language:
English
Publication Date:
20 Jul 2020
DOI:
https://doi.org/10.5089/9781513512150.006
ISBN:
9781513512150
ISSN:
2617-6750
Pages:
46
Keywords:
SDN; currency pricing; financing currency; Colombian peso; currency financing; expenditure switching; invoicing data; invoicing currency; Currencies; Exchange rates; Exports; Depreciation; Imports; Global; trade pricing; trade invoicing; exchange rate; external adjustment
Legal-disclaimer:
Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate.The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.
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The extensive use of the US dollar when firms set prices for international trade (dubbed dominant currency pricing) and in their funding (dominant currency financing) has come to the forefront of policy debate, raising questions about how exchange rates work and the benefits of exchange rate flexibility. This Staff Discussion Note documents these features of international trade and finance and explores their implications for how exchange rates can help external rebalancing and buffer macroeconomic shocks.
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Cover Staff Discussion Notes
Staff Discussion Notes
ISSN:
2617-6750
Publisher:
International Monetary Fund