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This paper presents a methodology for the calculation of bilateral equilibrium exchange rates for a panel of currencies in a way that guarantees consistency at the global level. A theoretical model, which encompasses the balance of payments and the Balassa-Samuelson approaches to real exchange rate determination, shows that the stock of net foreign assets and the evolution of sectoral prices are the fundamentals underlying the behavior of the real exchange rate. An unobserved componentsdoi:10.2139/ssrn.199030 fatcat:oivlgidlhjel7l5tyfgy2yhd2i