Bank of Mexico governor nomination sparks uncertainty

2021 ◽  
Keyword(s):  
Exchange Rate ◽  
Interest Rates ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Content Type ◽  
Finance Minister ◽  
The Us ◽  
Floating Exchange Rate ◽  
Rate Policy ◽  
The Government

Significance AMLO initially nominated Arturo Herrera for the role in June, replacing him as finance minister with Rogelio Ramirez de la O. Incumbent Governor Alejandro Diaz de Leon will stand down at the end of December. Impacts A tighter monetary policy will open a significant gap with US interest rates, helping to stabilise the peso against the US dollar. Given Rodriguez’s provenance, the harmonious relationship between Banxico and the finance ministry will probably continue. The nomination of an unexpected individual to lead the central bank will reaffirm AMLO’s authority on economic matters. Although the finance ministry controls exchange rate policy, the government is not likely to modify the free-floating exchange rate regime.

Exchange Rate Regimes and Economic Stability

2010 ◽  
pp. 29-43
Author(s):  
S. Smirnov
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Real Sector ◽  
Economic Stability ◽  
Exogenous Shocks ◽  
Floating Exchange Rate ◽  
Rate Policy ◽  
Managed Floating

The Bank of Russia intends to introduce inflation targeting policy and exchange rate free floating regime in three years. Exogenous shocks absorption which stabilizes the real sector of economy is usually considered to be one of the advantages of free floating exchange rate policy. However, our research based on the analysis of 25 world largest economies exchange rates and industrial production during the crisis of 2008-2009 does not confirm this hypothesis. The article also analyzes additional risks associated with free floating exchange rate regime in Russia and presents some arguments in favor of managed floating exchange rate regime.

scholarly journals The Role of China's Bureaucracy in its No-Devaluation Policy during the Asian Financial Crisis

2003 ◽  
Vol 4 (1) ◽  
pp. 61-76 ◽  
Author(s):  
LEONG H. LIEW
Keyword(s):  
Exchange Rate ◽  
Financial Crisis ◽  
Foreign Relations ◽  
Policy Making ◽  
Exchange Rate Regime ◽  
Asian Financial Crisis ◽  
Exchange Rate Policy ◽  
The Us ◽  
Rate Policy

Analysts have generally offered two explanations for China's no-devaluation policy during the Asian financial crisis. The first is China's good economic fundamentals and the renminbi is not fully convertible. The second is China's foreign relations' imperative. China was endeavouring to seek favourable entry conditions into the WTO and improve relations with its Asian neighbours. At the same time it sought to exploit the undercurrent of resentment in Asia towards the role played by the US during the crisis. Policy making in China has become more institutionalized in the post-Deng era, but these explanations ignore the role of China's domestic bureaucratic actors in exchange rate policy making. This paper examines the exchange rate regime preferences of China's key economic ministries and their influences in exchange rate policy making and argues that Party leaders were able to adopt a no-devaluation policy throughout the crisis because China's key economic ministries actively supported or acquiesced to that policy.

The Foreign Currency Exchange Rate Policy Up Until 1986

2020 ◽  
pp. 209-229
Author(s):  
Einar Lie
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Foreign Currency ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
International Exchange ◽  
Currency Exchange ◽  
Currency Exchange Rate ◽  
Rate Policy ◽  
The Government

This chapter studies how Norges Bank came to play a central, technical role in maintaining and defending a stable krone exchange rate during the years 1946–86. This role was reflected in how the bank advised on the basis of a loyal position to the fixed krone exchange rate regime and to binding international exchange rate cooperation. In 1978, Norway backed out of the European fixed exchange rate cooperation, and during 1976–86, the krone was devalued ten times. Even though Norges Bank officially came to contribute to both recommending and carrying out this policy, the policy defied the strong ideals and viewpoints of the organization. The exchange rate policy, and the problems it led to in relation to the central bank, caused the government, in the first half of the 1980s, to push Norges Bank completely aside when it came to the shaping of Norwegian exchange rate policy. Nevertheless, much of the policy was still shaped inside the walls of the institution.

US and Chinese yield curve responses to RMB exchange rate policy shocks

2019 ◽  
Vol 9 (3) ◽  
pp. 360-385 ◽  
Author(s):  
Zhiwu Hong ◽  
Linlin Niu ◽  
Gengming Zeng
Keyword(s):  
Exchange Rate ◽  
Discrete Time ◽  
Yield Curve ◽  
Exchange Rate Policy ◽  
Content Type ◽  
Term Structure Model ◽  
Market Sentiment ◽  
The Us ◽  
Policy Shocks ◽  
Rate Policy

Purpose Using a discrete-time version of the arbitrage-free Nelson–Siegel (AFNS) term structure model, the authors examine how yield curves in the US and China react to exchange rate policy shocks as China introduces gradual reforms to make its exchange rate regime more flexible. The paper aims to discuss this issue. Design/methodology/approach The authors characterize the specification of the discrete-time AFNS model, prove the uniqueness of the solution for model identification, perform specification analysis on its canonical form and detail the MCMC estimation method with a fast and reliable prior extraction step. Findings Model decomposition reveals that in the US yield responses, changes in risk premia for medium- to long-term yields dominate changes in yield expectation for short- to medium-term yields, indicating that the portfolio rebalancing effect due to varying risk perception is stronger than the signaling effect due to policy rate expectation. Practical implications The results are helpful in diagnosing market sentiment and exchange rate risk pricing as China further internationalizes its currency. Originality/value The methodology can be easily extended to study yield curve responses to other scenarios of policy shocks or regime changes.

Fear of Free Floating or Forced Exchange Rate Fixing

2004 ◽  
pp. 112-122
Author(s):  
O. Osipova
Keyword(s):  
Exchange Rate ◽  
Financial Crisis ◽  
Exchange Rates ◽  
Inflation Targeting ◽  
Exchange Rate Policy ◽  
Float Exchange Rate ◽  
Floating Exchange Rate ◽  
Rate Policy ◽  
Exchange Rate Arrangements ◽  
Pass Through

After the financial crisis at the end of the 1990 s many countries rejected fixed exchange rate policy. However actually they failed to proceed to announced "independent float" exchange rate arrangement. This might be due to the "fear of floating" or an irreversible result of inflation targeting central bank policy. In the article advantages and drawbacks of fixed and floating exchange rate arrangements are systematized. Features of new returning to exchange rates stabilization and possible risks of such policy for Russia are considered. Special attention is paid to the issue of choice of a "target" currency composite which can minimize external inflation pass-through.

scholarly journals The choice of an exchange rate regime: Outcomes and constraints

2006 ◽  
Vol 51 (168) ◽  
pp. 73-94 ◽  
Author(s):  
Srdjan Marinkovic
Keyword(s):  
Exchange Rate ◽  
Slow Growth ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Country Study ◽  
Exchange Rate Misalignment ◽  
Rate Policy ◽  
Policy Measures ◽  
Exchange Policy ◽  
The Stability

An inappropriate exchange rate policy is likely to undermine overall efforts to transform the economy. Namely, it is now well accepted either at the theoretical or policy level that situations of real exchange rate misalignment could be translated into important welfare costs. This country study highlights "irrelevancy" of the stability criteria when slow growth recovery threatens to endanger even social roots of determination for reform. We discuss foreign exchange policy and other related policy measures that are likely to align economic and political goals inside a trade-off between stability and growth.

Monetary and Exchange Rate Policy in Fragile States

2021 ◽  
pp. 367-405
Author(s):  
Christopher Adam ◽  
James Wilson
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Balance Of Power ◽  
Exchange Rate Policy ◽  
Fragile States ◽  
Policy Choices ◽  
Structural Fragility ◽  
Rate Policy ◽  
Proximate Causes

This chapter charts monetary and exchange rate policy aspects of countries’ descent into, and exit from, economic fragility and draws out some key normative policy lessons for fragile countries and their external partners. Choices around exchange rate regime and the conduct of monetary policy in fragile states will rarely be fundamental drivers of deep structural fragility, even though they may present as proximate causes. Nor are they likely to be decisive in driving the recovery from extreme fragility. However, monetary and exchange rate policy choices can and do play an important role in affecting movements into fragility as well as shaping potential exit paths. Moreover, choices in these domains affect the likely distribution of rents, including those generated by policy distortions themselves. In doing so, they alter the balance of power and can decisively shift the points of influence for policy, including by outside agents.

Switching to Floating Exchange Rate in Russia under the Strategy of Price Stability

2015 ◽  
Vol 2015 (4) ◽  
pp. 11-29
Author(s):  
Sergey Dubinin ◽  
Nina Miklashevskaya
Keyword(s):  
Exchange Rate ◽  
Main Part ◽  
Inflation Targeting ◽  
World Market ◽  
Emerging Countries ◽  
Exchange Rate Policy ◽  
Policy Issues ◽  
The World ◽  
Floating Exchange Rate ◽  
Rate Policy

The article focuses on the implementation of the exchange rate policy of the Bank of Russia aimed to switch from the managed arrangement to floating under inflation targeting. It provides a theoretical framework of such policy with special regard to emerging countries. The main part of the article deals with the policy issues, which Russia has been facing within the western sanctions and oil price falling at the world market. It contains the analysis of risks, which countries implementing the switching to floating may be exposed to and which should be taken into account by government authorities. Special attention is paid to the measures of economic policy to minimize the risks. It is concluded that the switching to floating may be appropriate only in case of availability of a set of required conditions.

THE CASE FOR AN INTERMEDIATE EXCHANGE RATE REGIME

2007 ◽  
Vol 52 (03) ◽  
pp. 295-307 ◽  
Author(s):  
JOHN WILLIAMSON
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Rate System ◽  
Advantages And Disadvantages ◽  
Economics Profession ◽  
Rate Policy ◽  
Exchange Rate Changes ◽  
Floating Rates

The argument that any exchange rate regimes other than firmly fixed and freely floating rates were infeasible — the so-called bipolarity thesis — acquired great popularity in the wake of the Asian crisis of a decade ago, but it has almost vanished today. One reason is surely the unkind empirical evidence, which shows that intermediate regimes — measured as those where both reserve and exchange rate changes lie in an intermediate range — are not in fact tending to disappear (Levy Yeyati and Sturzenegger, 2002). Another reason is the recognition that exchange rate policy should have other objectives besides avoiding crises, and that in the world we live in today it is reasonable to give these other objectives a significant priority. And perhaps a third factor is growing recognition that it is possible to design or operate intermediate regimes in ways that avoid exposing them to the dangers that were focused on by the disciples of bipolarity. This article starts by distinguishing the options that countries face in choosing an exchange rate regime. It examines the advantages and disadvantages of each of them, finally suggesting that for most countries the real choice lies between freely floating rates, floating rates disciplined by a reference rate system, and an ill-defined managed floating with the management undefined. Three issues may influence the choice between those alternatives: transparency; perceived consistency with that pillar of current macroeconomic thinking, inflation targeting; and the theory of what determines exchange rates. In the latter context, it is argued that the current conventional wisdom of the economics profession is wrong, and that a more convincing diagnosis of the process of exchange rate determination lends support to the proposal for a reference rate system.

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