IMF: USD real effective exchange rate overvalued by 10-20%

Eren Sengezer FXStreet

"The International Monetary Fund said that the U.S. dollar was overvalued by 10 percent to 20 percent, based on U.S. near-term economic fundamentals," Reuters reported on Friday.

Key quotes (via Reuters):

Euro is broadly in line with eurozone fundamentals as a whole, ranging from undervaluation of 5 pct to overvaluation of 3 pct,
For Germany, euro real effective exchange rate is overvalued by 10-20 pct compared to German fundamentals
China's yuan is broadly in line with fundamentals, but current account surplus still too large
Japan's yen is broadly in line with fundamentals due to appreciation in 2016
British pound valuation is 0-15 pct above level consistent with fundamentals, uncertainty over Brexit is high
Mexican peso undervalued by 5-15 pct under scenario where protectionism risks don't fully materialize
South Korean won undervalued by 5-15 pct vs fundamentals, current account surplus among highest of economies assessed

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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