Lower rates link to higher exchange rate impact – BIS paper
Working paper finds monetary policy’s impact on exchange rate has grown as rates have fallen
The exchange rate has become “significantly” more sensitive to monetary policy over time, with the fall of interest rates to historic lows playing an important role, a working paper finds.
Published on April 11 by the Bank for International Settlements (BIS), Monetary policy’s rising FX impact in the era of ultra-low rates, by Massimo Ferrari, Jonathan Kearns and Andreas Schrimpf, studies both conventional and unconventional policy, and covers the seven most traded currencies across the globe –
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