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157 Results

Exports and the Exchange Rate: A General Equilibrium Perspective

Staff Working Paper 2022-18 Patrick Alexander, Abeer Reza
How do a country’s exports change when its currency depreciates? Does it matter which forces drive the exchange rate deprecation in the first place? We find that this relationship varies greatly depending on what drives exchange rate movements, and we conclude that the direct relationship between the exchange rate and exports is weak for Canada.

Real Exchange Rate Decompositions

Staff Discussion Paper 2022-6 Bruno Feunou, Jean-Sébastien Fontaine, Ingomar Krohn
We break down the exchange rate based on an explicit link between fixed income and currency markets. We isolate a foreign exchange risk premium and show it is the main driver of the exchange rate between the Canadian and US dollars, especially on monetary policy and macroeconomic news announcement days.

Foreign Exchange Fixings and Returns Around the Clock

Staff Working Paper 2021-48 Ingomar Krohn, Philippe Mueller, Paul Whelan
We document a new empirical finding in the foreign exchange market: currency returns show systematic reversals around the benchmark fixings. Specifically, the US dollar, on average, appreciates in the hours before fixes and depreciates after fixes.

Tariffs and the Exchange Rate: Evidence from Twitter

Staff Working Paper 2021-36 Dmitry Matveev, Francisco Ruge-Murcia
Do tariffs affect exchange rates? We look at President Trump’s tweets during talks on the North American Free Trade Agreement and find that anticipation of higher tariffs on imports from Canada and Mexico led to an appreciation of the US dollar relative to Canadian and Mexican currency.
Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Trade integration JEL Code(s): F, F1, F13, F3, F31

Exchange Rates, Retailers, and Importing: Theory and Firm-Level Evidence

Staff Working Paper 2019-34 Alex Chernoff, Patrick Alexander
We develop a model with firm heterogeneity in importing and cross-border shopping among consumers. Exchange-rate appreciations lower the cost of imported goods, but also lead to more cross-border shopping; hence, the net impact on aggregate retail prices and sales is ambiguous.
June 17, 2019

The merits of a floating exchange rate

Speech summary Lawrence L. Schembri Economics Society of Northern Alberta (ESNA) Edmonton, Alberta
Deputy Governor Lawrence Schembri explains how Canada’s monetary policy framework—inflation targeting underpinned by a flexible exchange rate—has proved to be the most durable in the post-war period.
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