Parallel stories: FX lending to households in Poland, Romania and Hungary, 1997–2011

2013 ◽  
Vol 63 (3) ◽  
pp. 257-286 ◽  
Author(s):  
András Hudecz
Keyword(s):  
Exchange Rate ◽  
Central And Eastern Europe ◽  
Foreign Currency ◽  
Local Development ◽  
Exchange Rate Regime ◽  
Short Review ◽  
Flexible Exchange Rate ◽  
Critical Assessment ◽  
Empirical Literature ◽  
Regulatory Measures

The analysis of household foreign currency (FX) lending begins with a short review of the theoretical and empirical literature. I investigate the factors that have helped or hindered such lending, particularly in Central and Eastern Europe. The study goes on to look at the experiences in Poland, Romania and Hungary. The choice is based on the fact that all three countries operate a flexible exchange rate regime and that household FX lending is prevalent in all of them. The analysis of each country touches upon the factors that have contributed to the local development of FX borrowing. However, the study focuses on the regulatory measures taken to curb such lending. The study concludes with a review and critical assessment of the policies that have been adopted with an eye to solving social and economic difficulties arising from FX indebtedness.

Currency Crises and Exchange Rate Exposure

2013 ◽  
Vol 21 (1) ◽  
pp. 49-70
Author(s):  
Jin-Wan Cho ◽  
AiLian Bian ◽  
Kyung-In Park
Keyword(s):  
Exchange Rate ◽  
Currency Crises ◽  
Foreign Currency ◽  
Exchange Rate Regime ◽  
Exchange Rate Volatility ◽  
Flexible Exchange Rate ◽  
Firm Level ◽  
Exchange Rate Exposure ◽  
Floating Exchange Rate ◽  
The Government

While undergoing currency crises, countries under fixed exchange rate regime elect to adopt flexible exchange rate regime. It is generally expected that if a country launches floating exchange rate regime, the exchange rate volatility increases. Therefore, the increase in exchange rate volatility may increase exposures to currency risks at the firm level. Previous research, however, such as Bian, Park and Cho (2006) shows that right after the currency crisis of 1997~1998, currency risk exposure for Korean firms actually decreased after the government adopted flexible exchange rate regime. In this study, we intend to study the effects of changes in exchange rate regimes on foreign currency exposures at the firm level around the currency crises in the 1990s using worldwide data. We use 2116 firms in 23 countries finds evidence that exchange rate exposure of majority of firms decreases after the financial crises. In a sub-sample analysis in which sub-samples are created depending on whether the home country changed exchange rate regime from fixed to flexible, we find that the reduction of exposure was greater for firms in countries that changed the regimes than those in countries that did not.

scholarly journals Exchange rate regime choice

2006 ◽  
Vol 53 (3) ◽  
pp. 313-334 ◽  
Author(s):  
Emilija Beker
Keyword(s):  
Decision Making ◽  
Exchange Rate ◽  
Shelf Life ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Point Of View ◽  
External Factors ◽  
Advantages And Disadvantages ◽  
Complex Process ◽  
Highly Sensitive

The choice of an adequate exchange rate regime proves to be a highly sensitive field within which the economic authorities present and confirm themselves. The advantages and disadvantages of fixed and flexible exchange rate regimes, which have been quite relativized from the conventional point of view, together with simultaneous, but not synchronized effects of structural and external factors, remain permanently questioned throughout a complex process of exchange rate regime decision making. The paper reflects the attempt of critical identification of the key exchange rate performances with emphasis on continuous non-uniformity and (un)certainty of shelf life of a relevant choice.

scholarly journals Euroisation in the Western Balkans: The Evidence for Macedonian Economy

2017 ◽  
Vol 8 (2) ◽  
pp. 307-315
Author(s):  
Tatjana Boshkov ◽  
Zoran Temelkov ◽  
Aleksandra Zezova
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Exchange Rate Regime ◽  
Extended Period ◽  
Emerging Countries ◽  
Western Balkans ◽  
Balkan Countries ◽  
High Level ◽  
Benefits And Costs ◽  
Prudential Policy

Abstract Euroisation is a problem with a long history and usually persistent phenomena. The high level of euroisation is common in emerging countries in Europe as in the countries with fixed exchange rate regime. In Western Balkan countries have been identified a strong presence of foreign currency. The fact is that transactions could take a place outside of the banking channels, which is not a case for FX-loan and FX-deposit ratios. It’s difficult to measure how much foreign money is in the economy. This is the reason to use data for currency substitution index. This index is high for Macedonia indicating high level of real euroisation. After the crisis, the levels are reduced (lower remittances from abroad). Considering the exchange rate experience of Macedonia, it’s likely to remain significantly euroised country for an extended period. IMF considers appropriate strategy which provides support for the gradual de-euroisation in maintaining macro-prudential policy and development of the domestic market. Another important strategy is the maintenance of prudent policies that mitigate foreign currency risks. The paper shows the persistence of FX mainly in Macedonian economy and discusses about benefits and costs, in light of the recent economic crisis.

scholarly journals EXCHANGE RATE FLEXIBILITY, CAPITAL MOBILITY AND INFLATION TRANSMISSION IN MALAYSIA

2009 ◽  
Vol 8 (1) ◽  
Author(s):  
Mansor H. Ibrahim
Keyword(s):  
Exchange Rate ◽  
Capital Mobility ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
International Transmission ◽  
Exchange Rate Flexibility ◽  
The Us ◽  
Small Economy ◽  
Inflation Transmission ◽  
Limited Exchange

The paper assesses the international transmission of inflation for a small economy, Malaysia, over three sample periods marked by different degrees of exchange rate flexibility. Contradicting to conventional wisdom of less pronounced foreign nominal influences under the flexible exchange rate regime, this research finds evidence that the inflation transmission from the US to Malaysia is strongest during the period marked by increasing exchange rate flexibility (i.e. 1993-1998). This research also observes significant inflation effects of exchange rate depreciation during the same period. While this research observe less pronounced impacts of the US during the limited exchange rate flexibility period (i.e. 1988-1999), the US influences are virtually absent during the recent fixed regime (i.e. 1998-2005). This research believes that the intensity of capital flows across the three periods might have explained the results.

Negotiating the Trilemma: The Indian Experience

2012 ◽  
Vol 12 (1) ◽  
pp. 1850249 ◽  
Author(s):  
Abhijit Sen Gupta ◽  
Ganesh Manjhi
Keyword(s):  
Exchange Rate ◽  
Capital Flows ◽  
Current Account Deficit ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Active Management ◽  
Reserve Bank ◽  
Indian Experience ◽  
Policy Objectives ◽  
Healthy Growth

Increased integration with the global capital markets in recent years has forced India to negotiate the trilemma, balancing the objectives of monetary independence, exchange rate stability, and orderly capital flows. India’s calibrated approach towards liberalization of capital account, wherein certain flows and agents were accorded priority in the liberalization process, has helped India to deal with the trilemma. In this paper, we examine India’s experience in negotiating the trilemma during the last three decades. In doing so, we deviate from the existing literature by quantifying the various policy objectives under the trilemma. This allows us to analyze the extent to which pursuit of an objective has entailed giving up two other objectives. Using empirical methods, we find that India has been constrained by the trilemma during the last three decades. However, instead of adopting corner solutions, India has juggled the various policy objectives under the trilemma as per the demands of the macroeconomic situation. The overall policy architecture encompassed active management of capital flows, especially volatile flows and debt flows, a moderately flexible exchange rate regime with the Reserve Bank of India (RBI) intervening at times to prevent excessive volatility, sterilization of these interventions through multiple instruments, and building up of a stockpile of reserves. This intermediate approach has suited India well as it has been able to maintain a healthy growth rate, targeted monetary and credit growth rates, a moderate inflation rate through most of the period, and a sustainable current account deficit.

Inflation targeting and exchange rate regimes in emerging markets

2018 ◽  
Vol 18 (2) ◽  
Author(s):  
Christian Ebeke ◽  
Armand Fouejieu
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Inflation Targeting ◽  
Propensity Scores ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Marginal Effect ◽  
It Adoption ◽  
Exchange Rate Flexibility ◽  
The Exchange Rate

Abstract This paper investigates the effects of the adoption of inflation targeting (IT) on the choice of exchange rate regime in emerging markets (EMs), conditional on certain macroeconomic conditions. Using a large sample of EMs and after dampening the endogeneity of the adoption of IT using a selection on observables, we find that IT countries on average have a relatively more flexible exchange rate regime than other EMs. However, the flexibility of the exchange rate regime shows strong heterogeneity among IT countries. IT countries with low trade and financial openness and with a large share of external debt exhibit a lower exchange rate flexibility than others. Moreover, the marginal effect of IT adoption on the exchange rate flexibility increases with the duration of the IT regime in place, and with the propensity scores to adopt it.

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