Currency speculation and dollar fluctuations

Stephan Schulmeister

Banca Nazionale del Lavoro Quarterly Review, 1988, vol. 41, issue 167, 343-365

Abstract: In this study the reasons behind the wide fluctuations of the dollar exchange rate following the breakdown of the Bretton Woods system, for the most part unexplained by the prevailing exchange rate theories, are explored. To do so, the author investigates the exchange rate between the two most traded currencies, the dollar and the deutschemark, from 1973 to 1988. In the first part, the pattern of the daily exchange rate movements is examined to show that a sequence of upward and downward trends interrupted by non-directional movements is typical of exchange rate dynamics in the short run. Moreover, this pattern is systemically exploited through currency speculation, particularly through the use of “technical analysis”. In the second part, the author focuses on the medium-term, arguing that fluctuations can be explained as the result of interacting disequilibria in the goods and asset markets. Although currency speculation has been systemically profitable for most currencies, it should be considered to be destabilizing since the sequence of price runs caused large and persistent deviations of exchange rates from their equilibrium values (purchasing power parity).

Keywords: dollar exchange rate; Bretton Woods system; price; speculation (search for similar items in EconPapers)
JEL-codes: E31 E42 E43 (search for similar items in EconPapers)
Date: 1988
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/10837/10716 (application/pdf)

Related works:
Journal Article: Currency speculation and dollar fluctuations (1988)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:psl:bnlqrr:1988:41

Ordering information: This journal article can be ordered from
http://www.economiacivile.it

Access Statistics for this article

Banca Nazionale del Lavoro Quarterly Review is currently edited by Alessandro Roncaglia

More articles in Banca Nazionale del Lavoro Quarterly Review from Banca Nazionale del Lavoro
Bibliographic data for series maintained by Carlo D'Ippoliti ().