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Determinants of exchange rates: the case of the Chilean peso

UNCW Author/Contributor (non-UNCW co-authors, if there are any, appear on document)
Sebastian Zwanger (Creator)
Institution
The University of North Carolina Wilmington (UNCW )
Web Site: http://library.uncw.edu/
Advisor
Cet Ciner

Abstract: In this study, we analyzed the relationship between the exchange rate movements of two countries, Chile and the United States, by studying the underlying fundamentals given by the modern exchange rate theory. In this context, we included in our regression analysis three main economic factors. Monetary policy interest rate, money supply and inflation rates were considered for both countries since January 1990. We also included a fourth variable in our model; Copper Price. The evolution of this commodity’s price played an important role in our study as we will discover that a significant portion in exchange rates variation is explained by this variable. Copper was considered because of the increasing importance of this commodity in the Chilean economy. The results show that the determinants of the exchange rate may vary over time. The independent variables that have an effect on the exchange rate may lose their explanatory power when economic conditions change or a switch in the foreign exchange rate policy dictated by central banks or, as we proved, when variations on certain markets takes place.

Additional Information

Publication
Thesis
A Thesis Submitted to the University of North Carolina Wilmington in Partial Fulfillment of the Requirements for the Degree of Master of Business Administration
Language: English
Date: 2009
Keywords
Devaluation of currency--Chile, Dollar American, Foreign exchange rates--Chile, Foreign exchange rates--United States, Monetary policy--Chile, Monetary policy--United States
Subjects
Foreign exchange rates -- Chile
Foreign exchange rates -- United States
Monetary policy -- Chile
Monetary policy -- United States
Devaluation of currency -- Chile
Dollar, American