tutor2u | Benefits and costs of a depreciation of a currency

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Benefits and costs of a depreciation of a currency

Geoff Riley

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?

Input price inflation in the UK, credited source: ONS

Relevant Tweets on the depreciation of sterling

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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