Globalização e inconversibilidade monetária

Abstract

This paper proposes a theoretical analysis on exchange rates determinationbased on Keynes and Minsky, and aims at highlighting the role offinance, monetary hierarchy and the international liquidity cycleon exchange rate determination, especially on peripheral currencies.The International Monetary System is hierarchical and the internationalliquidity of the peripheral currencies depends not so much on thedomestic fundamentals but instead depend primarily on the expectationsof international agents. Hence, the alternation of moments of higherand lower liquidity preference sets the liquidity cycles and moreoverdetermines moments of "search for yield", with strong demand forassets in peripheral currencies, and moments of "flight to quality", with a return to the central currencies. Additionally, it is arguedthat a liquidity cycle is not restricted to a Keynesian process ofasset allocation but also assumes a Minskyan dynamic of liabilitiesformation. At the upward phase of the cycle, borrowing in creditmarkets or leveraging in derivatives markets allow the creation ofnew liquidity in the system. Meantime, in the downward phase, settlementof debts and deleveraging generates a destruction of liquidity inthe system. In this context, it is argued that the carry trade isa major mechanism of transmission from liquidity cycle to exchangerates. With these elements, the paper describes a process where carrytrade tends to appreciate the peripheral currency - associated witha high interest rates - during the upward phase of the cycle of liquidityand depreciate them in the reversal phase.