Advanced-Country Policies and Emerging-Market Currencies : The Impact of U.S. Tapering on India’s Rupee

The global financial crisis and its aftermath have triggered extraordinary policy responses in advanced countries. The impacts of these policy responses—from asset price bubbles to currency depreciations—have often been felt in the developing world. As tapering talk evolves into actual withdrawal of...

Full description

Bibliographic Details
Main Authors:	Ikeda, Yuki, Medvedev, Denis, Rama, Martin
Format:	Working Paper
Language:	en_US
Published:	World Bank Group, Washington, DC 2015
Subjects:	exchange rates tapering currency monetary policy emerging markets foreign central bank depreciation quantitative easing
Online Access:	http://hdl.handle.net/10986/21658

id	okr-10986-21658
recordtype	oai_dc
spelling	okr-10986-216582021-04-23T14:04:03Z Advanced-Country Policies and Emerging-Market Currencies : The Impact of U.S. Tapering on India’s Rupee Ikeda, Yuki Medvedev, Denis Rama, Martin exchange rates tapering currency monetary policy emerging markets foreign central bank depreciation quantitative easing The global financial crisis and its aftermath have triggered extraordinary policy responses in advanced countries. The impacts of these policy responses—from asset price bubbles to currency depreciations—have often been felt in the developing world. As tapering talk evolves into actual withdrawal of quantitative easing in the United States, and as the Euro Zone launches its own quantitative easing program, there are good reasons to be concerned about the financial stability of emerging economies. India's experience with U.S. tapering offers insights into what to expect. This paper estimates the contribution of external and domestic factors to short-term fluctuations in the value of the Indian rupee between 2004 and 2014, using a rich dynamic model that controls for a large number of exchange rate determinants. The paper finds that a global surprise factor, more than domestic vulnerabilities, was the main driver of the large rupee depreciation in summer 2013. With the surprise factor gone, further normalization of U.S. monetary policy is unlikely to have significant effects on the rupee exchange rate. 2015-03-31T16:46:31Z 2015-03-31T16:46:31Z 2015-03 Working Paper http://hdl.handle.net/10986/21658 en_US Policy Research Working Paper;No.7219 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank Group, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper India United States
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	exchange rates tapering currency monetary policy emerging markets foreign central bank depreciation quantitative easing
spellingShingle	exchange rates tapering currency monetary policy emerging markets foreign central bank depreciation quantitative easing Ikeda, Yuki Medvedev, Denis Rama, Martin Advanced-Country Policies and Emerging-Market Currencies : The Impact of U.S. Tapering on India’s Rupee
geographic_facet	India United States
relation	Policy Research Working Paper;No.7219
description	The global financial crisis and its aftermath have triggered extraordinary policy responses in advanced countries. The impacts of these policy responses—from asset price bubbles to currency depreciations—have often been felt in the developing world. As tapering talk evolves into actual withdrawal of quantitative easing in the United States, and as the Euro Zone launches its own quantitative easing program, there are good reasons to be concerned about the financial stability of emerging economies. India's experience with U.S. tapering offers insights into what to expect. This paper estimates the contribution of external and domestic factors to short-term fluctuations in the value of the Indian rupee between 2004 and 2014, using a rich dynamic model that controls for a large number of exchange rate determinants. The paper finds that a global surprise factor, more than domestic vulnerabilities, was the main driver of the large rupee depreciation in summer 2013. With the surprise factor gone, further normalization of U.S. monetary policy is unlikely to have significant effects on the rupee exchange rate.
format	Working Paper
author	Ikeda, Yuki Medvedev, Denis Rama, Martin
author_facet	Ikeda, Yuki Medvedev, Denis Rama, Martin
author_sort	Ikeda, Yuki
title	Advanced-Country Policies and Emerging-Market Currencies : The Impact of U.S. Tapering on India’s Rupee
title_short	Advanced-Country Policies and Emerging-Market Currencies : The Impact of U.S. Tapering on India’s Rupee
title_full	Advanced-Country Policies and Emerging-Market Currencies : The Impact of U.S. Tapering on India’s Rupee
title_fullStr	Advanced-Country Policies and Emerging-Market Currencies : The Impact of U.S. Tapering on India’s Rupee
title_full_unstemmed	Advanced-Country Policies and Emerging-Market Currencies : The Impact of U.S. Tapering on India’s Rupee
title_sort	advanced-country policies and emerging-market currencies : the impact of u.s. tapering on india’s rupee
publisher	World Bank Group, Washington, DC
publishDate	2015
url	http://hdl.handle.net/10986/21658
_version_	1764448902053888000

Advanced-Country Policies and Emerging-Market Currencies : The Impact of U.S. Tapering on India’s Rupee

Similar Items