The International Monetary Fund cautioned that monetary policy easing are unlikely to lead to currency devaluations that are adequate enough to cause a sustained improvement in a country's trade balance.
"One should not put too much stock in the view that easing monetary policy can weaken a country's currency enough to bring a lasting improvement in its trade balance through expenditure switching," IMF Chief Economist Gita Gopinath and researchers Gustavo Adler and Luis Cubeddu said on Wednesday in a blog post on the institution's website.
"Monetary policy alone is unlikely to induce the large and persistent devaluations that are needed to bring that result," they added.
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