Foreign Exchange and Money Markets in the Context of the Exchange Rate Target Zone
The paper has assessed market participants' confidence in the national currency of Latvia in the period between January 2001 and April 2003 using as the basis the position of the lats interest rates within the interest rate corridor. For the purpose of the study, the method of Lars E. O. Svensson was modified taking into account quoted interest rates and exchange rates as well as using the simple interest rate calculation. For the term of up to 1 year, arbitrage opportunities in Latvia's foreign exchange and money markets, likely to arise from the absence of money market participants' confidence in the existing foreign exchange corridor, have not been observed. The assessment of Latvia's money market participants does not signal any realignment possibility for the foreign exchange regime within the coming year.
|Date of creation:||17 Aug 2004|
|Date of revision:|
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CEPR Discussion Papers
493, C.E.P.R. Discussion Papers.
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NBER Working Papers
3795, National Bureau of Economic Research, Inc.
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IMF Working Papers
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"The operation and collapse of fixed exchange rate regimes,"
Handbook of International Economics,
in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 36, pages 1865-1911
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