Exact(8)
But the more recent surge in its nominal exchange rate is puzzling and awkward.
Under floating exchange rates, the adjustment occurs mainly by changing the nominal exchange rate.
China's nominal exchange rate is much less important than the domestic policy adjustments needed in both countries.
What matters is the so-called real exchange rate the nominal exchange rate adjusted by prices at home and abroad.
At most, therefore, an adjustment in the nominal exchange rate is a facilitator of a wider set of desired adjustments.
The ruble traded virtually unchanged from previous session at 36.48 against a dollar-euro basket that the central bank uses for guiding the currency's nominal exchange rate.
In an emerging economy with rapid productivity growth the real exchange rate should rise over time, through either higher inflation or a rise in the nominal exchange rate.
Spain needs to become more competitive relative to Germany, but it can't shift its nominal exchange rate with Germany, because they share the same currency.
Related(1)
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