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Drivers of Peru's Equilibrium Real Exchange Rate Is the Nuevo Sol a Commodity Currency?

This paper tests the hypothesis of ‘commodity currency’ on the nuevo sol and, more generally, identifies the drivers of Peru’s equilibrium real exchange rate using a cointegration analysis. The results show that export commodity prices do not have a statistically significant impact on Peru’s real ef...

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Bibliographic Details
Main Author: Tashu, Melesse
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2015
Series:IMF Working Papers
Subjects:
Government And The Monetary System
Payment Systems
Monetary Economics
Currency; Foreign Exchange
Regimes
Real Effective Exchange Rates
Open Economy Macroeconomics
Money
Investments: Commodities
Commodities
Foreign Exchange
Standards
Currencies
Monetary Systems
Prices
Macroeconomics
Commodity Prices
Real Exchange Rates
Investment & Securities
Commercial Products
Money And Monetary Policy
Commodity Markets
Peru
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:This paper tests the hypothesis of ‘commodity currency’ on the nuevo sol and, more generally, identifies the drivers of Peru’s equilibrium real exchange rate using a cointegration analysis. The results show that export commodity prices do not have a statistically significant impact on Peru’s real effective exchange rate, suggesting that the nuevo sol is not a commodity currency. The paper provides empirical evidence that large profit repatriation and foreign exchange intervention have effectivelly insulated Peru’s real exchange rate from the impact of commodity price shocks. Peru’s equilibrium real exchange rate is found to be driven mostly by productivity and government consumption
Physical Description:28 pages
ISBN:9781498302760

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