About this work
Exchange rate changes alone can misrepresent the pressure on emerging market currencies during a crisis. Jonathan Fortun and Robin Brooks combine currency movements with foreign reserve losses to compare the COVID shock in April 2020. Their exchange market pressure indices suggest that observed falls in the Turkish lira and Egyptian pound understated the underlying strain, while Mexico’s larger peso decline reflected more pressure being absorbed directly by the exchange rate.
Abstract
Exchange rate changes alone can misrepresent the pressure on emerging market currencies during a crisis. Jonathan Fortun and Robin Brooks combine currency movements with foreign reserve losses to compare the COVID shock in April 2020. Their exchange market pressure indices suggest that observed falls in the Turkish lira and Egyptian pound understated the underlying strain, while Mexico’s larger peso decline reflected more pressure being absorbed directly by the exchange rate.
Cite this work
Jonathan Fortun, Robin Brooks (2020). GMV: COVID-19 and EM Depreciation Pressure. Institute of International Finance.