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RBA Glossary definition for exchange rates

exchange rates – The price of one currency expressed in terms of another currency. Any exchange rate can be quoted two ways, e.g. Australian dollars per US dollar (USD/AUD) or US dollars per Australian dollar (AUD/USD). The convention for the Australian dollar is that it is quoted as the foreign currency price of the Australian dollar. This is sometimes referred to as the 'Indirect' method of quoting.

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Data Appendix

1 May 1991 RDP 9103
David W.R. Gruen and Gordon D. Menzies
Download the Paper 251. KB. The empirical results in the paper are derived from 302 end-week observationsof interest rates and exchange rates from 23 December 1983 to 29 September 1989 ... All exchange rates (4 p.m., Sydney) are the foreign currency
https://www.rba.gov.au/publications/rdp/1991/9103/data-appendix.html

Discussion

1 May 1991 RDP 9103
David W.R. Gruen and Gordon D. Menzies
Most exchange rate models (Dornbusch (1976) being the most famous example) predict that, other things equal, an increase in domestic real interest rates leads to an instantaneous appreciation of the domestic ... By contrast, interest differentials on
https://www.rba.gov.au/publications/rdp/1991/9103/discussion.html

The Model

1 May 1991 RDP 9103
David W.R. Gruen and Gordon D. Menzies
Equation (2) implies that each real exchange rate is expected to follow a random walk with no drift. ... differential. The Discussion section examines an alternative to the assumption that the real exchange rate follows a random walk.
https://www.rba.gov.au/publications/rdp/1991/9103/model.html

Appendix

1 May 1991 RDP 9103
David W.R. Gruen and Gordon D. Menzies
Over a week, exchange rate changes – rather than changes in the US inflation rate – dominate the variance-covariance of relative real returns on a portfolio of short-term nominal assets. ... In our final example of near-rational behaviour, the
https://www.rba.gov.au/publications/rdp/1991/9103/appendix.html

The Failure of Uncovered Interest Parity: Is it Near-rationality in the Foreign Exchange Market?

1 May 1991 RDP 9103
David W.R. Gruen and Gordon D. Menzies
Research Discussion Papers contain the results of economic research within the Reserve Bank
https://www.rba.gov.au/publications/rdp/1991/9103.html

Introduction

1 May 1991 RDP 9103
David W.R. Gruen and Gordon D. Menzies
Download the Paper 251. KB. Uncovered interest parity is one of the linchpins of modern exchange rate theory. ... The investor chooses the shares held in different currencies by examining interest rates and expected changes in the exchange rate.
https://www.rba.gov.au/publications/rdp/1991/9103/introduction.html

References

1 May 1991 RDP 9103
David W.R. Gruen and Gordon D. Menzies
Dornbusch, R. (1976), ‘Expectations and exchange rate dynamics’ Journal of Political Economy, 84, 1161–76. ... Frankel, J.A. and Meese, R. (1987), ‘Are exchange rates excessively variable?’, NBER Macroeconomics Annual 1987, 117–153.
https://www.rba.gov.au/publications/rdp/1991/9103/references.html