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

Agnès Benassy-Quere and Yeganeh Forouheshfar

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

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 (search for similar items in EconPapers)
JEL-codes: F31 F33 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2013-02
New Economics Papers: this item is included in nep-eec, nep-ifn, nep-mon and nep-opm
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ftp://mse.univ-paris1.fr/pub/mse/CES2013/13016.pdf (application/pdf)

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:mse:cesdoc:13016

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