A RE-STATEMENT OF SINGAPORE'S EXCHANGE RATE AND MONETARY POLICIES

2003 ◽  
Vol 48 (02) ◽  
pp. 201-212 ◽  
Author(s):  
PAUL S. L. YIP
Keyword(s):  
Hong Kong ◽  
Exchange Rate ◽  
Band System ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Currency Board ◽  
Monetary Policies ◽  
Rate Level ◽  
Rate Policy ◽  
Exchange Rate Level

This policy note, which focuses on Singapore's monetary and exchange rate policies, has a number of objectives. First, it highlights the fact that the Monetary Authority of Singapore (MAS) is equipped with a powerful tool to target the exchange rate level it desires (within limits). Second, it reviews Singapore's exchange rate policy since 1980 and explains that the de facto policy is far more complicated and flexible than the simplistic but oft-noted description of the MAS pursuing a "strong Singapore dollar" policy. Specifically, the paper argues that Singapore's exchange rate regime is an ideal example of the monitoring band system favoured by John Williamson. Third, the paper contrasts the Singapore currency regime with the relatively more inflexible currency board arrangement (CBA) operated in Hong Kong. The relative advantages of Singapore's flexible monitoring band arrangement over Hong Kong's rigidly fixed CBA are highlighted.

scholarly journals Monetary policy and exchange rate regime in tourist islands

2020 ◽  
pp. 135481662095949
Author(s):  
Federico Inchausti-Sintes ◽  
Ubay Pérez-Granja
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Dynamic Stochastic General Equilibrium ◽  
Exchange Rate Policy ◽  
Monetary Policies ◽  
Rate Policy ◽  
Dynamic Stochastic ◽  
Travel Industry

The broad impact of the travel industry on economies has been comprehensively analysed in the tourism literature. Despite this, its consequences for monetary policy have remained unaddressed. This article aims at providing a first approach in this line for the case of three small tourist islands such as Cabo Verde, Mauritius and Seychelles. The research is based on a Bayesian estimation using a dynamic stochastic general equilibrium model (DSGE), and the optimal response to a tourism demand shock of four monetary policies is analysed. According to the results, both a conventional peg and an inflation-targeting policies achieve better economic performance. More precisely, the inflation is lower in the former. However, the rise in consumption and the gain in the external competitiveness are sharper in the latter. Finally, the other two policies, an inflation-targeting with managed exchange rate policy and an imported-inflation targeting policies, generate higher consumption and external competitiveness, but, also higher inflation and interest rate.

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 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.

scholarly journals On the Maintenance Costs and Exit Costs of the Peg in Hong Kong

2005 ◽  
Vol 08 (03) ◽  
pp. 377-403 ◽  
Author(s):  
Paul S. L. Yip
Keyword(s):  
Hong Kong ◽  
Exchange Rate ◽  
Policy Maker ◽  
Band System ◽  
Currency Board ◽  
Rate System ◽  
Maintenance Costs ◽  
Exit Costs ◽  
Exchange Rate System ◽  
Board System

This paper attempts to pioneer a discussion on the exit and maintenance costs of the Currency Board System (CBS) in Hong Kong, and hopes to invite more debate on the issue. It suggests that the exit costs will depend on the timing of an exit, whether there are supplementary packages to mitigate the exit costs, and the choice of an alternative exchange rate system. In particular, it suggests that the monitoring band system favored by Williamson (2000) could help to reduce the exit costs. In addition, the paper points out that there are ways to reduce both the exit and maintenance costs. It then proposes a reform that could benefit the economy regardless of whether the policy maker eventually chooses to continue with or abandon the peg. The study is not only crucial to Hong Kong, but also important to other economies with a CBS as well as to the debate on the choice of exchange rate system.

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.

Emerging Markets Central Banks Exchange Rate Policy

2011 ◽  
pp. 21-34 ◽  
Author(s):  
S. Andryushin ◽  
V. Kuznetsova
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Exchange Rate Regime ◽  
Central Banks ◽  
Exchange Rate Policy ◽  
Point Of View ◽  
Nominal Exchange Rate ◽  
Safeguard Measures ◽  
Rate Policy ◽  
The Exchange Rate

The article analyzes the emerging markets central banks exchange rate policy, while they choose the exchange rate regime in conditions of financial globalization. The authors present the new IMF exchange rate regimes taxonomy which separates them using historical data about nominal exchange rate developments. They identify some factors which affect the exchange rate regime option from the macroeconomic point of view. The article reviews some national markets safeguard measures from external shocks generated by international capital inflow or outflow.

scholarly journals SINGAPORE'S EXCHANGE RATE POLICY: SOME IMPLEMENTATION ISSUES

2007 ◽  
Vol 52 (03) ◽  
pp. 445-458 ◽  
Author(s):  
HWEE-KWAN CHOW
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Policy Instrument ◽  
Exchange Rate Policy ◽  
Policy Framework ◽  
Successful Operation ◽  
Foreign Exchange Intervention ◽  
Rate Policy ◽  
The Exchange Rate

Reflecting the small open nature of its economy, Singapore has adopted an exchange rate-centered monetary policy framework since 1981. The exchange rate regime in Singapore is an intermediate regime that follows the basket-band-crawl system. With this managed float system, the MAS has successfully deterred speculators from attacking the domestic currency for most of the past three decades. At the same time, the flexibility accorded by the managed float system aided Singapore in escaping from the 1997–1998 Asian crisis relatively unscathed. In order to advance our understanding of the hitherto successful operation of Singapore's exchange rate policy, we examine the following three aspects of its implementation: (i) the use of the exchange rate instead of the interest rate as the key monetary policy instrument; (ii) the management of the currency basket in terms of foreign exchange intervention operations; and (iii) regulating the level of domestic liquidity alongside exchange rate policy. This paper also provides some insights on the challenges ahead that potentially face policymakers when implementing Singapore's exchange rate policy.

scholarly journals Accession to the Eurozone as Lithuania’s exit strategy from the currency board system

Equilibrium ◽  
2015 ◽  
Vol 10 (3) ◽  
pp. 27
Author(s):  
Dorota Żuchowska
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Policy ◽  
Currency Board ◽  
Convergence Criteria ◽  
Exit Strategy ◽  
Rate System ◽  
Starting Point ◽  
Rate Policy ◽  
Exchange Rate System ◽  
Board System

In the years 2004-2014 the Lithuania’s exchange rate policy was based on a rigid currency board system. After a period of uncontested success in the fight against inflation in the first decade of the transition and economic growth, entering the ERM II in 2004 and efforts to adopt the euro were treated as an optimal exit strategy from the currency board system. However, the consequences of this exchange rate system in the following years (until 2014) prevented Lithuania from meeting the economic convergence criteria. The starting point for the research is based on the theoretical analysis of literature studying benefits and risks associated with the use of the currency board system by the monetary authorities. The empirical analysis refers to the case of Lithuania and covers the years 2004-2014. The purpose of this analysis is to look at the effects of the use of the currency board system from the perspective of the convergence criteria of monetary nature and the extent of their implementation in the absence of opportunities for autonomous monetary policy.

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.

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