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Unification of Dual Foreign Exchange Markets

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  • Onour, Ibrahim A

Abstract

In this paper I investigate the impact of overnight floating of the official rate and easing foreign exchange restrictions on post-unification domestic inflation rate. After analysing the behaviour of an economy under dual foreign exchange markets, an official market with a crawling foreign exchange rate and a free illegal parallel market. The paper also shows that maintaining a unified free exchange rate depends on the degree of foreign exchange restrictions under dual foreign exchange system and on the level of the official reserve that prompts foreign exchange liberalisation policy. Copyright 2000 by Kluwer Academic Publishers

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  • Onour, Ibrahim A, 2000. "Unification of Dual Foreign Exchange Markets," Economic Change and Restructuring, Springer, vol. 33(3), pages 171-184.
    • Handle: RePEc:kap:ecopln:v:33:y:2000:i:3:p:171-84
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    1. Kiguel, Miguel & O'Connell, Stephen A, 1995. "Parallel Exchange Rates in Developing Countries," The World Bank Research Observer, World Bank, vol. 10(1), pages 21-52, February.
    2. Onour, Ibrahim & Cameron, Norman, 1997. "Parallel Market Premia and Misalignment of Official Exchange Rates," MPRA Paper 15537, University Library of Munich, Germany.
    3. Pinto, Brian, 1989. "Black Market Premia, Exchange Rate Unification, and Inflation in Sub-Saharan Africa," The World Bank Economic Review, World Bank, vol. 3(3), pages 321-338, September.
    4. Dornbusch, Rudiger, 1986. "Special Exchange Rates for Capital Account Transactions," The World Bank Economic Review, World Bank, vol. 1(1), pages 3-33, September.
    5. Saul Lizondo, Jose, 1987. "Unification of dual exchange markets," Journal of International Economics, Elsevier, vol. 22(1-2), pages 57-77, February.
    6. Homi Kharas & Brian Pinto, 1989. "Exchange Rate Rules, Black Market Premia and Fiscal Deficits: The Bolivian Hyperinflation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(3), pages 435-447.
    7. Pinto, Brian, 1991. "Black markets for foreign exchange, real exchange rates and inflation," Journal of International Economics, Elsevier, vol. 30(1-2), pages 121-135, February.
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    Cited by:

    1. Ibrahim ONOUR, 2018. "Technical Trading Rules And Trading Signals In The Black Market For Foreign Exchange In Sudan," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 9(1), pages 25-31.
    2. Onour, Ibrahim, 2010. "South Sudan Referundum: A Macroeconomic Analysis of Post-Secession Scenario," MPRA Paper 29897, University Library of Munich, Germany.
    3. Onour, Ibrahim, 2011. "Financial stability in small open economy under political uncertainty," MPRA Paper 29883, University Library of Munich, Germany.
    4. Onour, Ibrahim & Cameron, Norman, 1997. "Parallel Market Premia and Misalignment of Official Exchange Rates," MPRA Paper 15537, University Library of Munich, Germany.

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