Moscow Black Markets and Official Markets for Foreign Exchange: How Much Flexiblity in Flexible Rates?
AbstractFlexible exchange-rate systems often are not recommended for countries undergoing economic transition. In late 1989, the former Soviet Union instituted exchange-rate flexibility on the limited share of enterprise international transactions channelled through the auction and. later, interbank markets for foreign-currency trade. This paper details the regulatory evolution of this system and analyses the impact of announced and implemented policy initiatives on two sets of flexible exchange rates observed in Moscow: i) the exchange-rates instituted through foreign-currency auctions and interbank markets; and ii) black-market exchange rates on dollar-ruble trade. We ask whether the flexible-rate system, as implemented, was associated with the negative or positive features of flexible exchange-rate systems. Initially the auction and interbank currency structure was used as a mechanism for a steady real depreciation of the ruble. Thereafter, the ruble was pegged in real terms at a level initially equal to the black-market exchange rate. This peg persisted until the end of 1991, when government central-bank foreign-exchange reserves were depleted and the crawling peg appears to have been abandoned. Throughout the sample, patterns in black-market exchange rates contrasted sharply with those of the auction rates. Black-market rates exhibited greater real variability and exhibited sharp speculative swings.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4040.
Date of creation: Mar 1992
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Goldberg, L.S., 1992. "Moscow Black Markets and Official Markets for Foreign Exchange: How Much Flexibility in Flexible Rates?," Working Papers 92-11, C.V. Starr Center for Applied Economics, New York University.
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.