Large Depreciations: Recent Experience in Historical Perspective

Data for a large sample of countries dating back to the early 1970s reveal that the large depreciations against the US dollar that are occurring in many countries are not unprecedented in magnitude or duration. The pass-through to inflation from exchange rate depreciation has been slightly more muted than in previous occasions, but it is not out of line with experience since the mid-1990s. The current account adjustment has been more limited than in the past, possibly suggesting that the period of weak currencies may be prolonged.