Recognizing Reality—Unification of Official and Parallel Market Exchange Rates PDF Download
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Author: Mr.Simon T Gray
Publisher: International Monetary Fund
ISBN: 1513568639
Category : Business & Economics
Languages : en
Pages : 45
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Book Description
Some central banks have maintained overvalued official exchange rates, while unable to ensure that supply of foreign exchange meets legitimate demand for current account transactions at that price. A parallel exchange rate market develops, in such circumstances; and when the spread between the official and parallel rates is both substantial and sustained, price levels in the economy typically reflect the parallel market exchange rate. “Recognizing reality” by allowing economic agents to use a market clearing rate benefits economic activity without necessarily leading to more inflation. But a unified, market-clearing exchange rate will not stabilize without a supportive fiscal and monetary context. A number of country case studies are included; my thanks to Jie Ren for pulling together all the data for the country case studies, and the production of the charts.
Author: Mr.Simon T Gray
Publisher: International Monetary Fund
ISBN: 1513568639
Category : Business & Economics
Languages : en
Pages : 45
Get Book Here
Book Description
Some central banks have maintained overvalued official exchange rates, while unable to ensure that supply of foreign exchange meets legitimate demand for current account transactions at that price. A parallel exchange rate market develops, in such circumstances; and when the spread between the official and parallel rates is both substantial and sustained, price levels in the economy typically reflect the parallel market exchange rate. “Recognizing reality” by allowing economic agents to use a market clearing rate benefits economic activity without necessarily leading to more inflation. But a unified, market-clearing exchange rate will not stabilize without a supportive fiscal and monetary context. A number of country case studies are included; my thanks to Jie Ren for pulling together all the data for the country case studies, and the production of the charts.
Author: Derbali, Abdelkader Mohamed Sghaier
Publisher: IGI Global
ISBN:
Category : Business & Economics
Languages : en
Pages : 458
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Book Description
The field of Financial Management & Economics (FME) is constantly adapting to the changing economic landscape, observing the ongoing developments in the global business environment. These shifting dynamics have introduced a variety of influences, both fleeting and enduring, that deeply affect the decision-making foundations within the business arena. Researchers are tasked with shedding light on the bigger picture, capturing the essence of both subtle and significant shifts. As they confront unprecedented challenges, the imperative to document and comprehend these transformations resonates more urgently than ever before. Recent Developments in Financial Management and Economics is a work that beckons academics, researchers, and industry professionals to engage in the exploration of these changes. This book has a singular objective: to provide professionals, academics, and researchers with new theoretical frameworks and the latest empirical research findings. The book focuses on trust as a key driver, influencing different levels of Financial Management & Economics. It explores trust across the global economy and individual interactions in networked settings, offering guidance for navigating the complexities of today's interconnected financial and economic systems.
Author: International Monetary Fund. Asia and Pacific Dept
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 35
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Book Description
Bangladesh: Selected Issues
Author: Mr.Kenneth Rogoff
Publisher: International Monetary Fund
ISBN: 1451875843
Category : Business & Economics
Languages : en
Pages : 85
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Book Description
Using recent advances in the classification of exchange rate regimes, this paper finds no support for the popular bipolar view that countries will tend over time to move to the polar extremes of free float or rigid peg. Rather, intermediate regimes have shown remarkable durability. The analysis suggests that as economies mature, the value of exchange rate flexibility rises. For countries at a relatively early stage of financial development and integration, fixed or relatively rigid regimes appear to offer some anti-inflation credibility gain without compromising growth objectives. As countries develop economically and institutionally, there appear to be considerable benefits to more flexible regimes. For developed countries that are not in a currency union, relatively flexible exchange rate regimes appear to offer higher growth without any cost in credibility.
Author: Dorosh, Paul A.
Publisher: Intl Food Policy Res Inst
ISBN:
Category : Political Science
Languages : en
Pages : 29
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Book Description
Despite reforms in early 2021, including a devaluation of the currency and a liberalization of imports, there remain significant distortions in Sudan’s wheat value chain, especially related to subsidized sales prices of flatbread. This flatbread subsidy, a key component of wheat policy, is not well-targeted. Calculations based on 2009 national household survey data and current 2021 prices and wheat supply show that urban poor households annually receive slightly less from this subsidy than urban non-poor households (18,900 and 20,800 SDG/capita). Rural poor households receive only 2,700 SDG/capita. This paper presents the results of several simulations of a partial equilibrium model of Sudan’s wheat economy that are designed to analyze the impacts of recent shocks and various policy options. Model simulations show that increased wheat imports, such as those financed by food aid, add to supplies for processing into wheat flour, flatbread, and other wheat products, resulting in lower prices for consumers and increased consumption, but also disincentives for production. A 300,000 ton increase in wheat imports, as occurred in early 2021, results in an 8 percent increase in wheat consumption and a 35 percent decline in the market price of non-flatbread wheat products. Production falls by 12 percent. Since flatbread prices are unchanged, wheat consumption of the urban poor, for whom flatbread is the major wheat product consumed, increases by only 4 percent. Raising flatbread prices by 30 percent to reduce the size of the fiscal subsidy reduces total consumption of flatbread by 17 percent and sharply reduces wheat consumption and real incomes of the urban poor. All households suffer a loss of 41 to 45 percent in the value of flatbread subsidies received. The urban poor experience the largest decline in total consumption of wheat (14 percent) and in total income (11 percent). (The average total income loss for all households is only 3 percent.) Reducing the flatbread subsidy without a compensating income transfer would significantly reduce the welfare of the urban poor and likely threaten political stability. Our results suggest that a combination of key wheat policies involving high levels of imports – including injection of food aid wheat into the economy in late 2020 – and subsidized flatbread will significantly benefit urban poor households. Nonetheless, the are important data gaps on several aspects of the wheat sector, including no recent nationally representative household expenditure survey data. In addition, greater transparency, including publication of quantities and prices of government purchases, sales of wheat and wheat flour, and quantities and prices of subsidized flatbread across the country has the potential to significantly increase the efficiency of the entire wheat sector. As shown in this paper, Sudan’s wheat policies in recent years, such as increased wheat imports, price subsidies in the wheat value chain, and low prices of flatbread, have in general favored consumers, to the detriment of producers. These interventions in the wheat value chain, especially those related to subsidies on flatbread, have especially large effects on the welfare of urban households, making these policies particularly politically sensitive. However, they have entailed high fiscal costs, threatening macro-economic stability and crowding out other possible investments to promote growth and poverty reduction. Careful policy analysis and ongoing monitoring of outcomes and new developments will be needed to help guide the important choices ahead.
Author: International Monetary Fund. Middle East and Central Asia Dept.
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 22
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Book Description
Libya: Selected Issues
Author: World Bank
Publisher: World Bank Publications
ISBN: 1464820260
Category : Business & Economics
Languages : en
Pages : 152
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Book Description
Notwithstanding global growth weakness and financial pressures, growth in South Asia is expected to remain robust, supported by slower fiscal consolidation than in other EMDEs, strong public investment, and a recovery as financial stress has subsided. Policy challenges include, in the short-term, preserving financial stability and restoring fiscal sustainability and, in the long-term, rekindling investment, and managing an energy transition. Currently, the energy intensity of South Asian economies is almost twice the global average—despite a decline over the past two decades that was almost entirely driven by firm-level, within-sector cuts in energy intensity. The potential benefit of regulatory policies, information interventions, and financial support to help accelerate the diffusion of these technologies, as well as the possibility that these could also lend broader support for countries' development objectives. The transition away from fossil fuels may have considerable labor market impacts. A wide range of policies, including better access to high-quality education, finance, and markets; improved labor mobility; and strengthened social safety nets, will be needed to facilitate the adjustment in labor markets while protecting vulnerable workers.
Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1451943229
Category : Business & Economics
Languages : en
Pages : 52
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Book Description
The paper reviews recent theoretical and empirical developments in the analysis of informal currency markets in developing countries. The basic characteristics of these markets are highlighted, and alternative analytical models to explain them are discussed. The implications for exchange rate policy —including imposition of foreign exchange restrictions, devaluation, and unification of exchange markets— in countries with a sizable parallel market are also examined.
Author: Giovanni Capannelli
Publisher:
ISBN: 9789715618700
Category : Cambodia
Languages : en
Pages : 0
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Book Description
In the transitional economies of Cambodia, the Lao People's Democratic Republic, and Viet Nam (the CLV countries), foreign currencies such as the US dollar commonly circulate in addtion to the local currency. National authorities must consider the costs and benefits of such a system, especially in relation to monetary and exchange policies' effect on their development priorities. "This pioneering study is an important contribution to understanding the underpinnings of the Mekong economies' dynamism...Highly recommended." -- Hal Hill, H.W. Arndt Professor of Southeast Asian Economies, Austratlian National University While dealing with multiple currencies is ultimately an issue of national economic policy, the CLV countries could benefit from greater regional cooperation on monetary and financial issues. They would be able to exploit economies of scale, introduce best practices, and facilitate the adoption of common regulatory standards. Greater regional dialogue on monetary policy could also help the CLV countries find a solution to the so-called multiple-currency phenomenon and reap more benefits from their increasing regional economic interdependence. This study, conducted by a team of economists from the Asian Development Bank, academics, and personnel from CLV finance ministries and central banks, explores the issues of multiple currencies and regional monetary cooperation among the economies of the Association of Southeast Asian Nations (ASEAN) in the context of increasing regional economic interdependence. It reviews the main issues related to the monetary and exchange rate policy decisions taken by CLV national authorities, and discusses the options and opportunities available for enhancing monetary and financial stability in the ASEAN region.
Author: Lawrence E. Hinkle
Publisher: World Bank Publications
ISBN: 019521126X
Category : Business & Economics
Languages : en
Pages : 638
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Book Description
The study cautiously identifies exchange rate misalignment as an important element in most of the exchange rate crises that plagued the developing world during the last decade. Given that the increasing integration of world capital markets, has escalated the costs of such crises, a broad consensus emerged in recent years, that the overriding objective of exchange rate policy in developing countries, should be to avoid episodes of prolonged, and substantial misalignment, i.e., situations in which the actual real exchange rate differs significantly from its long-run equilibrium value. It was the Bank's involvement in one such misalignment episode, that eventually led to this book. Following an overview on the concepts and measurement of exchange rate misalignment, its impact on the purchasing power parity, and the relationship between the external real exchange rate (RER), and the two-good internal RER for tradables non-tradables, the study presents methodologies - empirical applications - for estimating the RER equilibrium. The study reaches an optimistic conclusion - that enough is known to identify cases of misalignment, and be able to sound clear warning signals. The implication for exchange rate policy is that ignorance about the empirical value of the equilibrium exchange rate, cannot be used to clinch arguments for extreme exchange arrangements, such as clean floats, currency boards, and "dollarization."
