Moving to a Flexible Exchange Rate

Rupa Duttagupta, Cem Karacadag and Gilda Fernandez

No 2006/001, IMF Economic Issues from International Monetary Fund

Abstract: A growing number of countries are adopting flexible exchange rate regimes because flexibility offers more protection against external shocks and greater monetary independence. Other countries have made the transition under disorderly conditions, with the sharp depreciation of their currency during a crisis. Regardless of the reason for adopting a flexible exchange rate, a successful transition depends on the effective management of a number of institutional and operational issues. The authors of this Economic Issue describe the necessary ingredients for moving to a flexible regime, as well as the optimal pace and sequencing under different conditions.

Keywords: EI; foreign exchange; central bank intervention; exchange rate regime; market; inflation targeting; Twoway exchange rate movement; exchange rate volatility; exchange rate misalignment; market participant; basket of currencies; undervalued exchange rate; equilibrium exchange rate; Exchange rate flexibility; Exchange rates; Currency markets; Exchange rate arrangements; Currencies; Africa (search for similar items in EconPapers)
Pages: 25
Date: 2006-01-09
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