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

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dc.contributor.authorIkeda, Yuki
dc.contributor.authorMedvedev, Denis
dc.contributor.authorRama, Martin
dc.date.accessioned2015-03-31T16:46:31Z
dc.date.available2015-03-31T16:46:31Z
dc.date.issued2015-03
dc.description.abstractThe 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.en
dc.identifier.doi10.1596/1813-9450-7219
dc.identifier.urihttps://hdl.handle.net/10986/21658
dc.language.isoen_US
dc.publisherWorld Bank Group, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No.7219
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectexchange rates
dc.subjecttapering
dc.subjectcurrency
dc.subjectmonetary policy
dc.subjectemerging markets
dc.subjectforeign central bank
dc.subjectdepreciation
dc.subjectquantitative easing
dc.titleAdvanced-Country Policies and Emerging-Market Currenciesen
dc.title.subtitleThe Impact of U.S. Tapering on India’s Rupeeen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crossref.titleAdvanced-Country Policies and Emerging-Market Currencies: The Impact of U.S. Tapering on India's Rupee
okr.date.disclosure2015-03-23
okr.date.doiregistration2025-04-10T10:15:48.847216Z
okr.doctypePublications & Research
okr.doctypePublications & Research::Policy Research Working Paper
okr.globalpracticeMacroeconomics and Fiscal Management
okr.guid755801467980551998
okr.identifier.doi10.1596/1813-9450-7219
okr.identifier.reportWPS7219
okr.language.supporteden
okr.region.countryIndia
okr.region.countryUnited States
okr.topicFinance and Financial Sector Development::Currencies and Exchange Rates
okr.topicMacroeconomics and Economic Growth::Fiscal & Monetary Policy
okr.unitOffice of the Chief Economist, South Asia Region; and the Trade and Competitiveness Global Practice Group
relation.isAuthorOfPublicationf66b4922-756e-51d1-a970-246dc3a8fcf4
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