The impact of yuan internationalization on the euro-dollar exchange rate

Agnès Benassy-Quere and Yeganeh Forouheshfar

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We study the implication of a multipolarization of the international monetary system on cross-currency volatility. More specifically, we analyze whether the internationalization of the yuan could modify the impact of asset supply and trade shocks on the euro-dollar exchange rate, within a three-country, three-currency portfolio model. Our static model shows that the internationalization of the yuan (defined as a rise in the yuan in international portfolios) would be either neutral or stabilizing for the euro-dollar rate, whatever the exchange-rate regime of China. Moving to a dynamic, stock-flow framework, we show that the internationalization of the yuan would make exchange-rate variations more efficient to stabilize net foreign asset positions after a trade shock.

Keywords: China; yuan; exchange-rate regime; euro-dollar; dollar; euro; régime de change; Chine (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-ifn, nep-mon and nep-opm
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00801100v1
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Published in 2013

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Related works:
Working Paper: The Impact of Yuan Internationalization on the Euro-Dollar Exchange Rate (2013)
Working Paper: The Impact of Yuan Internationalization on the Euro-Dollar Exchange Rate (2013)
Working Paper: The Impact of Yuan Internationalization on the Euro-Dollar Exchange Rate (2013)
Working Paper: The Impact of Yuan Internationalization on the Euro-Dollar Exchange Rate (2013)
Working Paper: The impact of yuan internationalization on the euro-dollar exchange rate (2013)
Working Paper: The Impact of Yuan Internationalization on the Euro-Dollar Exchange Rate (2013)
Working Paper: The impact of yuan internationalization on the euro-dollar exchange rate (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00801100

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