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Dual Exchange Rates: the Mexican Experience, 1982–7

In: Parallel Exchange Rates in Developing Countries

Author

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  • Graciela L. Kaminsky

Abstract

On 6 August 1982, after a run against the peso left the Bank of Mexico with no foreign exchange reserves, a stabilization program to deal with the balance of payments crisis was announced. One important part of this stabilization program was the institution of a dual exchange rate system. The exchange regime consisted of a ‘preferential’ rate and a ‘general’ rate. The preferential rate applied to current account transactions while the general exchange rate applied to capital account transactions. The Central Bank set the preferential rate at 49.13 pesos per dollar and announced a daily devaluation of 4 cents. In contrast, the general rate was allowed to float. Immediately after the announcement, the general rate was equal to 75.33 pesos per dollar, implying a depreciation of 54.4 percent.

Suggested Citation

  • Graciela L. Kaminsky, 1997. "Dual Exchange Rates: the Mexican Experience, 1982–7," Palgrave Macmillan Books, in: Miguel A. Kiguel & J. Saul Lizondo & Stephen A. O’Connell (ed.), Parallel Exchange Rates in Developing Countries, chapter 3, pages 110-144, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-25520-7_4
    DOI: 10.1007/978-1-349-25520-7_4
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