This paper provides a new perspective on the exchange rate disconnect puzzle by referring to the expectations building … mechanism in foreign exchange markets. We analyze the role of expectations regarding macroeconomic fundamentals for expected … expectations regarding GDP growth, inflation, interest rates, and current accounts. Our empirical findings show that fundamentals …

theory for the expectations building mechanism due to the robust finding that in ation expectations are able to explain …This paper provides a new perspective on the exchange rate disconnect puzzle by referring to the expectations building … mechanism in foreign exchange markets. Therefore, we analyze the role of expectations regarding macroeconomic fundamentals for …