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Living with a Floating Exchange Rate

Author

Listed:
  • Maryse Farhi
  • Marcos Antonio Macedo Cintra

Abstract

Since the implementation of a floating exchange system by the Brazilian economicauthorities in mid-1999, the trajectory of the real exchange rate has been characterizedby extreme volatility, inherent in such a system. The Brazilian financial market, however,has the advantage to possess a reasonably liquid derivative market which can contribute to aless turbulent ‘relationship’ with a floating exchange regime. Nevertheless, any possible benefitsfrom this market to the Brazilian economy would require: the routine use of financialderivatives by economic agents in their business management, the elimination of any restrictionto access to derivative markets by foreign investors, and the improvement of supervisoryand regulatory mechanisms. JEL Classification: E42; E58; F31.

Suggested Citation

  • Maryse Farhi & Marcos Antonio Macedo Cintra, 2000. "Living with a Floating Exchange Rate," Brazilian Journal of Political Economy, Center of Political Economy, vol. 20(3), pages 359-364,.
    • Handle: RePEc:ekm:repojs:v:20:y:2000:i:3:p:359-364,:id:1011
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    More about this item

    Keywords

    Exchange rate regime; exchange rate; floating exchange rate; stabilization; regulation;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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