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From Fixed to Float; Operational Aspects of Moving towards Exchange Rate Flexibility

Author

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  • Gilda C Fernandez
  • Cem Karacadag
  • Rupa Duttagupta

Abstract

This paper identifies the institutional and operational requisites for transitions to floating exchange rate regimes. In particular, it explores key issues underlying the transition, including developing a deep and liquid foreign exchange market, formulating intervention policies consistent with the new regime, establishing an alternative nominal anchor in the context of a new monetary policy framework, and building the capacity of market participants to manage exchange rate risks and of supervisory authorities to regulate and monitor them. It also assesses the factors that influence the pace of exit and the appropriate sequencing of exchange rate flexibility and capital account liberalization.

Suggested Citation

  • Gilda C Fernandez & Cem Karacadag & Rupa Duttagupta, 2004. "From Fixed to Float; Operational Aspects of Moving towards Exchange Rate Flexibility," IMF Working Papers 04/126, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:04/126
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    Cited by:

    1. Thomson Fontaine, 2005. "Currency Crises in Developed and Emerging Market Economies; A Comparative Empirical Treatment," IMF Working Papers 05/13, International Monetary Fund.
    2. Barry Eichengreen, 2009. "From the Asian crisis to the global credit crisis: reforming the international financial architecture redux," International Economics and Economic Policy, Springer, vol. 6(1), pages 1-22, June.
    3. Cem Payaslioglu, 2009. "A tail index tour across foreign exchange rate regimes in Turkey," Applied Economics, Taylor & Francis Journals, vol. 41(3), pages 381-397.
    4. Marc Hofstetter & Jose Ignacio Lopez & Miguel Urrutia, 2018. "Limits to Foreign Exchange Net Open Positions and Capital Requirements in Emerging Economies," DOCUMENTOS CEDE 015995, UNIVERSIDAD DE LOS ANDES-CEDE.
    5. repec:wsi:jicepx:v:06:y:2015:i:03:n:s1793993315500155 is not listed on IDEAS
    6. Ahmet Atil Asici & Nadezhda Ivanova & Charles Wyplosz, 2008. "How to exit from fixed exchange rate regimes?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 13(3), pages 219-246.
    7. Michael Frömmel, 2010. "Volatility Regimes in Central and Eastern European Countries’ Exchange Rates," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 60(1), pages 2-21, February.
    8. Jorge Canales-Kriljenko & Turgut Kisinbay & Rodolfo Maino & Eric Parrado, 2006. "Setting the Operational Framework for Producing Inflation Forecasts," Working Papers Central Bank of Chile 362, Central Bank of Chile.
    9. Sanusi, Aliyu Rafindadi, 2010. "Lessons from the foreign exchange market reforms in Ghana: 1983-2006," MPRA Paper 29502, University Library of Munich, Germany.
    10. Naoyuki Yoshino & Sahoko Kaji & Tamon Asonuma, 2015. "Adjustments of Capital Account Restrictions and Exchange Rate Regimes in East Asia," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-32.
    11. repec:ukb:journl:y:2015:i:233:p:39-53 is not listed on IDEAS
    12. Bersch, Julia & Klüh, Ulrich H., 2007. "When countries do not do what they say: Systematic discrepancies between exchange rate regime announcements and de facto policies," Discussion Papers in Economics 2072, University of Munich, Department of Economics.
    13. Gwang-Ju Rhee & Eun Mo Lee, 2005. "Foreign exchange intervention and foreign exchange market development in Korea," BIS Papers chapters,in: Bank for International Settlements (ed.), Foreign exchange market intervention in emerging markets: motives, techniques and implications, volume 24, pages 196-208 Bank for International Settlements.
    14. Agnès Bénassy-Quéré & Amina Lahrèche-Révil & Valérie Mignon, 2004. "Le yuan et le G20," Revue d'Économie Financière, Programme National Persée, vol. 77(4), pages 127-146.
    15. International Monetary Fund, 2010. "Republic of Kazakhstan; Selected Issues," IMF Staff Country Reports 10/237, International Monetary Fund.
    16. Mariam El Hamiani Khatat, 2016. "Monetary Policy in the Presence of Islamic Banking," IMF Working Papers 16/72, International Monetary Fund.

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    Keywords

    Capital account liberalization; Exchange rate policy; Exchange markets; Intervention; International finance; Foreign exchange; Foreign exchange markets; capital account; exchange rate; inflation; exchange rate flexibility; foreign exchange market;

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