Real Exchange Rate Misalignment and Currency Crises

Heriqbaldi, Unggul; Widodo, Wahyu; Ekowati, Dian

doi:10.1080/00074918.2019.1662885

Cited by 10 publications

(11 citation statements)

References 55 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Holtemöller and Mallick [17] states that a positive misalignment increases the probability of currency crisis. Heriqbaldi, Widodo and Ekowati [16] state that "most of the currency crisis episodes experienced by Indonesia is always preceded by an overvalued exchange rate". Jongwanich [20] concludes that overvaluation is a basic warning variable in the currency crisis.…”

Section: Exchange Rate Misalignment and Currency Crisismentioning

confidence: 99%

“…Severe and permanent misalignment indicates economic incompatibility and may lead to an economic crisis. Such misalignment may also contribute to a currency crisis [16,17]. Many countries, such as Mexico (1994)(1995), Russia (1998), Brazil (1999), Turkey (2001), and Argentina (2002), have experienced currency crises that have created interruptions in their development path.…”

Section: Introductionmentioning

confidence: 99%

“…Jongwanich [20] concluded that real exchange rate overvaluation occurred before the currency crisis of 1997 in Thailand. Heriqbaldi et al [16] conclude that, of the 17 crises in Indonesia, 10 have been associated with high exchange rate misalignment.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Real effective exchange rate misalignment and currency crisis in Iran

Hassanzadeh

Mousavi

2023

Futur Bus J

View full text Add to dashboard Cite

This study aimed to examine real effective exchange rate (REER) misalignment in Iran and its relation to the currency crisis. The behavioral equilibrium exchange rate was employed to calculate the equilibrium exchange rate (EER), and misalignment was obtained using the exchange rate deviation from the equilibrium value. Using the autoregressive distributed lag (ARDL) method and data from 1986 to 2019, the long-run relationship between macroeconomic fundamentals and REER was estimated. The results show that trade openness, rate of productivity growth in tradable good production, net foreign assets of the central bank, oil exports, and terms of trade significantly affected the EER. Estimation of misalignment and its relationship with the currency crisis show that in the years before the crisis, there was generally a significant overvaluation in several consecutive years; hence, exchange rate misalignment serves as a leading index to predict the probability of a currency crisis.

show abstract

Section: Exchange Rate Misalignment and Currency Crisismentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Real effective exchange rate misalignment and currency crisis in Iran

Hassanzadeh

Mousavi

2023

Futur Bus J

View full text Add to dashboard Cite

show abstract

“…Currency crises. Holtemöller and Mallick (2013) and Heriqbaldi et al (2020) showed that currency misalignment were precursors of currency crises. For instance, to assess if misalignment could be used as an indicator of potential financial crisis, Holtemöller and Mallick (2013) looked at the ability of RER misalignment to predict the probability of a currency crisis in the next period.…”

Section: Amentioning

confidence: 99%

“…They showed that large and persistent misalignment were informative about macroeconomic crises. Heriqbaldi, Widodo, and Ekowati (2020) looked at whether the misalignment of the Indonesian rupiah contributed to the exchange rate crisis in the country. They found that 10 of the 17 crisis episodes related to the rupiah could be traced to large shocks to RER misalignment.…”

Section: Amentioning

confidence: 99%

Real Exchange Rate Misalignment and Business Cycle Fluctuations in Asia and the Pacific

Ambaw¹,

Pundit²,

Ramayandi³

et al. 2022

View full text Add to dashboard Cite

This paper investigates the impact of real exchange rate (RER) misalignment on business cycles among 22 economies in Asia and the Pacific from 1990 to 2018. It employs a panel vector autoregression involving consumer price index (CPI) inflation, output gap, short-term interest rate, and RER misalignment. The authors find that RER overvaluation may lead to a reduction in CPI inflation and short-term interest rate. The study also illustrates Asia and the Pacific’s heterogeneity as evidenced by the output gaps of some economies, particularly in Southeast Asia, which are shown to be more susceptible to RER misalignment shocks.

show abstract