Foreign Exchange Rate Regimes and Foreign Exchange Markets in Transitive Economies

Jaroslava Durčáková

Prague Economic Papers, 2011, vol. 2011, issue 4, 309-328

Abstract: In this paper we discuss the issue of the choice of foreign exchange rate regimes in transitive economies, their effect on the relative changes and the volatility of the foreign exchange rate and the development of the national foreign exchange market. The results of our analysis indicate that the choice of the foreign exchange rate regime is not a passive factor regarding both average relative changes in exchange rates and volatility as measured by the standard deviation. They also show that increased volatility of spot rates and a growing interest rate differential lead to the growth of the share of outright forwards and swaps (e.g. transactions that might be used for hedging) in relation to spot transactions.

Keywords: transitive economies; foreign exchange market; foreign exchange rate; foreign exchange rate regime (search for similar items in EconPapers)
JEL-codes: E31 F43 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (1)

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DOI: 10.18267/j.pep.402

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