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This paper studies the impact of enhanced transparency on risk sharing opportunities in the foreign exchange market and the associated implications for ex ante welfare. Transparency is measured in this model by the informational content of publicly observable signals about exchange rate developments. We find that in this model more transparency improves welfare in economies that are poorly endowed with capital and/or where investors are not very risk-averse, while welfare is reduced in economies with large capital endowments and/or where investors are highly risk-averse.

Banks and Banking --- Finance: General --- Foreign Exchange --- Money and Monetary Policy --- Exchange and Production Economies --- Incomplete Markets --- International Financial Markets --- General Financial Markets: General (includes Measurement and Data) --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Finance --- Currency --- Foreign exchange --- Financial services law & regulation --- Monetary economics --- Currency markets --- Exchange rates --- Futures markets --- Exchange rate risk --- Currencies --- Foreign exchange market --- Derivative securities --- Financial risk management --- Money

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While the underlying methodologies continue to be widely debated and refined, there is little consensus on how to assess the equilibrium exchange rate of economies dominated by production of finite natural resources such as the oil economies of the Middle East. In part this is due to the importance of intertemporal aspects (as the real exchange rate may affect the optimal/equitable rate of transformation of finite resource wealth into financial assets), as well as risk considerations given the relatively high volatility of commodity prices. The paper illustrates some important peculiarities of the exchange rate assessment for such natural resource producers by working through a simple two-period model that captures certain key aspects of many resource economies.

Foreign exchange rates. --- Petroleum products --- Petroleum industry and trade. --- Exchange rates --- Fixed exchange rates --- Flexible exchange rates --- Floating exchange rates --- Fluctuating exchange rates --- Foreign exchange --- Rates of exchange --- Petroleum --- Petroleum industry and trade --- Energy industries --- Oil industries --- Prices. --- Rates --- Prices --- Investments: Energy --- Exports and Imports --- Foreign Exchange --- Macroeconomics --- Public Finance --- Exchange and Production Economies --- Intertemporal Choice and Growth: General --- Macroeconomics: Consumption --- Saving --- Wealth --- Current Account Adjustment --- Short-term Capital Movements --- Economywide Country Studies: Asia including Middle East --- Energy: General --- Energy: Demand and Supply --- National Government Expenditures and Related Policies: General --- Investment & securities --- Currency --- International economics --- Public finance & taxation --- Oil --- Real exchange rates --- Current account --- Oil prices --- Expenditure --- Commodities --- Balance of payments --- Expenditures, Public --- Saudi Arabia