Economist's FX Move Skepticism Contrasts with IMF Research

Economist magazine recently described foreign exchange (fx) moves as a 'gimmick', but this assessment contrasts with extensive research conducted by the International Monetary Fund (IMF) in 2015. Brad Setser, an expert on international trade patterns, notes that German auto exports to China have dropped sharply, threatening about 0.6 percentage points of GDP.

Setser has also observed that European leaders view current trade relations with China as unbalanced and unsustainable. This assessment is based on models used by the Federal Reserve and the European Central Bank, which suggest that fx moves can have a significant impact on trade balances and economic growth.