In the News
Benefits and costs of a depreciation of a currency
12th October 2016
The effective exchange rate index for sterling has taken quite a pounding in the days since the Brexit vote. The pound has fallen sharply against the US dollar, the Euro and many other currencies; indeed the IMF find that sterling is second only to Nigeria with the weakest currency in 2016. This blog brings together some news articles and tweets related to the depreciation of the exchange rate, no doubt many students will be reading and writing about this as part of their macroeconomics this term.
Articles to read:
The Economist - Sterling, how low can it go? (July 2016)
Guardian news articles on the sterling exchange rate
7 ways the fall in the value of the pound affects us all (Independent)
The Economist - How will the pound’s depreciation affect inflation in Britain?
BBC News (Kamal Ahmed) - The pound’s fall and why it matters
South China Morning Post - Britain’s decision to go for a ‘hard’ Brexit promises rough ride ahead
Financial Times - Who are the winners and losers from the pound’s fall?
Reuters - Sterling index at lowest since Jan 2009 as Brexit woes persist
Guardian: The Marmite war aside, the falling pound isn't all bad news for Britain
The depreciation of sterling is contributing to rising input price inflation as shown from this ONS chart - will producer prices follow?
Relevant Tweets on the depreciation of sterling
devaluations stimulate domestic demand, a good thing when it's been too weak for too long, not just about x & cpi
— yames (@YamesAlexander) October 28, 2016
Car trade:
— Faisal Islam (@faisalislam) October 27, 2016
UK->rEU $19bn 46% of UK exports, 38% rEU imports
rEU->UK. $41.5bn 27% rEU exports, 90% UK importshttps://t.co/y9apo2pUrV pic.twitter.com/ofjZWcFJMw
& for those looking for the why/so what of the fall in #Sterling : from last week, 7 things you should know. https://t.co/DwDo63iG0v @BV #fx
— Mohamed A. El-Erian (@elerianm) October 11, 2016
'The only people who lose from the £s depreciation are those who borrowed short-term dollars to invest in property' https://t.co/KGMSXit9rJ
— Charles Wheeler (@tweetcmw) October 10, 2016
Amazing article on the causes and consequences of the depreciation of sterling. Excellent stimulus. #econ2 #econ4 https://t.co/6uJbkN1THu
— Will Haines (@MrWillHaines) September 26, 2016
Sterling drops to parity with Euro for travellers - the #Brexit impact! pic.twitter.com/lN6pvDUl0Y
— Gordon Macdonald MSP (@GMacdonaldSNP) October 8, 2016
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.
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