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N° 279 |
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| June 2008 |
| Euro-Dollar: Face-to-Face |
Agnès Bénassy-Quéré
Sophie Béreau
Valérie Mignon |
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| The financial crisis that began during the summer of 2007 accelerated the depreciation of the dollar. Has the dollar now
fallen far enough for global disequilibria to be reabsorbed and for a reappreciation to take place? What do the two
methods commonly used to determine medium- or long-term equilibrium exchange rates tell us? The results they give
differ, but they both indicate that the dollar and the euro are overvalued in real effective terms. The two currencies
should therefore depreciate in relation to other currencies. The abruptness of the dollar’s depreciation since summer 2007
might mean that the U.S. currency’s current weakness will be relatively short-lived. As for the euro, its depreciation
against other currencies is countered by the fact that it forms the main alternative to the dollar. |
Abstract |
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