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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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Appendix B: A Framework for Analysis

1 Feb 1998 RDP 9803
Gordon de Brouwer and Luci Ellis
Price. Terms of trade. Real exchange rate. World export prices. World real interest rate. ... where the superscript eqm indicates an equilibrium value. The real exchange rate is:.
https://www.rba.gov.au/publications/rdp/1998/1998-03/appendix-b.html

Policy Implications

1 Feb 1998 RDP 9803
Gordon de Brouwer and Luci Ellis
interest rates that affect output and the real exchange rate will be different from each other. ... Since the exchange rate depends on current and future real interest rates, it jumps up in response to tighter expected monetary policy.
https://www.rba.gov.au/publications/rdp/1998/1998-03/policy-implications.html

Forward-looking Behaviour and Credibility: Some Evidence and Implications for Policy

1 Aug 1998 RDP 9803
Gordon de Brouwer and Luci Ellis
Research Discussion Papers contain the results of economic research within the Reserve Bank
https://www.rba.gov.au/publications/rdp/1998/9803.html

References

1 Feb 1998 RDP 9803
Gordon de Brouwer and Luci Ellis
28–50. Blundell-Wignall, A., J. Fahrer, and A. Heath (1993), ‘Major Influences on the Australian Dollar Exchange Rate’, in A. ... 244–276. Dornbusch, R. (1976), ‘Expectations and Exchange Rate Dynamics’, Journal of Political Economy, 84(6), pp
https://www.rba.gov.au/publications/rdp/1998/1998-03/references.html

Introduction

1 Feb 1998 RDP 9803
Gordon de Brouwer and Luci Ellis
If inflation is higher than expected, financial markets will expect higher future real interest rates and an appreciation of the exchange rate (all else given) if they believe that the central ... Moreover, when groups of people in the economy form their
https://www.rba.gov.au/publications/rdp/1998/1998-03/introduction.html

Conclusions

1 Feb 1998 RDP 9803
Gordon de Brouwer and Luci Ellis
the exchange rate differ from each other. ... This can induce either oscillations or overshooting in the exchange rate (depending on the particular mix of expectations), with implications for the variability of inflation and output.
https://www.rba.gov.au/publications/rdp/1998/1998-03/conclusions.html

Evidence on the Formation of Inflation Expectations

1 Feb 1998 RDP 9803
Gordon de Brouwer and Luci Ellis
In a rational market, foreign exchange market participants anticipate the higher real interest rates, and the exchange rate may appreciate in response to the positive inflation surprise. ... The exchange rate now systematically moves in the same
https://www.rba.gov.au/publications/rdp/1998/1998-03/evidence-on-the-formation-of-inflation-expectations.html