Exchange rate

• This article suggests that part of the likely decline in exchange rate pass-through to import prices is a result of the rise of global value chains.
• As production increasingly relies on imported intermediate goods, production costs and hence export prices become more sensitive to exchange rate changes.
• Hence the existence of cross-country production linkages may amplify exchange rate pass-through to export prices but thereby dampen exchange rate pass-through to import prices.

1 Introduction

• The degree to which exchange rate changes feed through to import prices is commonly referred to as the exchange rate pass-through to import prices.
• However, the amount by which import prices in local currency change in response to a given change in the exchange rate may vary.
• The extent to which they react is the degree of exchange rate pass-through to import prices.
• Understanding and assessing this pass-through is essential for monitoring and forecasting domestic inflation, and hence for the calibration of monetary policy.
• A salient feature of advanced economies during the last few decades has been a likely decline in exchange rate pass-through to import prices.
• Another striking feature of the global economy during the last few decades has been the rise of global value chains.
• The fragmentation of production chains across borders has been accompanied by an increase in the cross-border flow of intermediate goods.
• Several studies have explored the effects of global value chains by looking at the increased fragmentation of production across borders.
• [9] This article examines the role of global value chain participation in exchange rate pass-through to import and export prices.
• Second, the greater pass-through to its trading partners export prices leads to a weakening of the economys exchange rate pass-through to import prices.
• The finding that global value chain participation may reduce economies exchange rate pass-through to import prices has important implications for the conduct and transmission of monetary policy.
• In particular, when exchange rate pass-through to import prices is low, an exchange rate depreciation may lead to only very limited expenditure-switching effects under which exports would rise and imports would fall.
• Section 3 discusses the mechanism through which global value chain participation may affect economies exchange rate pass-through to export and import prices.
• Section 4 reports results from an analysis of cross-country data that sheds light on the relevance of participation in global value chains for exchange rate pass-through to export and import prices.

2 The evolution of exchange rate pass-through to export and import prices and participation in global value chains

2.1 Exchange rate pass-through to export and import prices

• For example, while changes in the nominal effective exchange rate are estimated to have translated into a change in export prices equivalent to almost 70% of the exchange rate change within the same quarter in Denmark, export prices in Norway are estimated to have hardly changed.
• [14] Box 1 Estimating exchange rate pass-through to export and import prices In the empirical literature exchange rate pass-through is estimated as the impact of exchange rate changes on import and export prices, controlling for other factors that may affect trade prices, such as exporters production costs or local demand.
• [15] Accordingly, in this article exchange rate pass-through to export prices is estimated on the basis of country-specific rolling-window regressions[16]

• Hillenbrand calculates the foreign currency impact on net revenue in order to better measure the comparability of results between periods.
• We calculate the foreign currency impact by translating current year results at prior year foreign exchange rates.
• Given that there is no GAAP financial measure comparable to backlog, a quantitative reconciliation is not provided.
• Hillenbrand ( www.Hillenbrand.com ) is a global diversified industrial company with multiple leading brands that serve a wide variety of industries around the world.

• Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $9.6 million or 3.8% versus the same prior year one-month period.
• Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $77.1 million or 3.3% versus the same prior year nine-month period.
• Foreign currency exchange rate fluctuations impacted comparable net merchandise sales negatively by $10.9 million or 3.9% versus the same prior year period.
• Third Quarter 2019 Earnings Announcement Details:
  PriceSmart today also announced that it plans to release third quarter fiscal year 2019 financial results on Wednesday, July 10, 2019, after the market closes.

• Constant currency results are calculated by dividing the current quarter or year to date local currency segment results, excluding the local currency impact of foreign currency gains and losses, by the prior year's average exchange rate for the quarter or year to date and comparing them to actual U.S. dollar results for the prior quarter or year to date.
• The average exchange rates for the current quarter and the prior year first quarter are reported in Item 1 of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.
• Please see the reconciliation of Adjusted EBITDA to net earnings (loss) attributable to Century Casinos, Inc. shareholders above.
• Century Casinos disclaims any obligation to revise or update any forward-looking statement that may be made from time to time by it or on its behalf.