scholarly journals Fenomena Fear of Floating Nilai Tukar di Indonesia Periode 1998-2007: Identifkasi, Alasan Ekonomi, dan Implikasinya terhadap Kebijakan Moneter

2011 ◽  
Vol 12 (1) ◽  
pp. 15-30
Author(s):  
Budiasih Budiasih
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Economic Reason ◽  
Vector Autoregressive ◽  
Interest Rate Policy ◽  
Floating Exchange Rate ◽  
Rate Policy ◽  
The Interest Rate ◽  
Net Export ◽  
Fear Of Floating

The stable fluctuation of Rp against the US$ during the free floating exchange rate regime in 2002-2007 raises the existence of fear of floating exchange rate phenomenon in Indonesia. The GARCH method is use to verify this phenomenon. Moreover, Time Varying Parameter and Error Correction Mechanism method shows the economic reason behind the Monetary Authoritys response in stabilizing rupiah. Depreciation and increasing volatility of Rupiah raises ination and bank Non-Performing Loans, while appreciation and increasing volatility of Rupiah, reduce the net export. Furthermore, Vector Autoregressive confirms the Monetary Authority respond to exchange rate shock through the interest rate policy for four months and through the foreign reserves policy for two months.

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.

Downfall of the Regulatory System and Triumph of the Market

2020 ◽  
pp. 230-250
Author(s):  
Einar Lie
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Western Europe ◽  
Regulatory System ◽  
Exchange Rate Policy ◽  
Oil Price ◽  
Interest Rate Policy ◽  
Institutional Legitimacy ◽  
Rate Policy ◽  
The Interest Rate

This chapter discusses how, in the 1970s and 1980s, Norges Bank began to develop instruments with a view to steering economic policy under freer market conditions. However, governments of changing political hues were unwilling to let go of the low interest rate. The oil price fall in 1986 brought an abrupt change in interest rate and credit policy. The government’s tightening actions included the introduction of a more binding fixed exchange rate policy. The frequent recourse to corrective devaluations was to be a thing of the past. Hence, there was a justification for using the interest rate as an ongoing instrument to stabilize the exchange rate. This task fell to Norges Bank. The transition to an independent, active interest rate policy on the part of the central bank was abrupt and came as a surprise. Barely a year before the collapse of the oil price, the Storting had passed a law that made Norges Bank one of the least autonomous central banks in all of western Europe. Ultimately, it was the external situation, and in no sense an increase in government’s and the public’s recognition of the bank and its institutional legitimacy, that restored greater operative autonomy to Norges Bank.

scholarly journals Interest Rate Policy and Exchange Rates Volatility Lessons from Indonesia

2020 ◽  
Vol 9 (2) ◽  
pp. 19-42
Author(s):  
Haryo Kuncoro
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Exchange Rates ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Exchange Rate Volatility ◽  
Flexible Exchange Rate ◽  
Interest Rate Policy ◽  
Rate Policy ◽  
Exchange Rates Volatility

AbstractWhether or not inflation targeting adoption leads to increased volatility of exchange rates is controversial. The volatility increases with inflation targeting as a result of the flexible exchange rate regime. Others argue that inflation targeting delivers the best outcomes in terms of lower exchange rate volatility. The purpose of this paper is to investigate whether interest rate policy in inflation targeting frameworks – that is subjected to control inflation rate – may reduce the volatility of exchange rates. To test the hypothesis, we use monthly data in the case of Indonesia over the period 2005(7)-2016(7). Several control variables are introduced in the regressions. The result of the autoregressive distributed lag model proves the interest rate policy and foreign exchange intervention fail to reduce the exchange rates volatility. It seems inflation targeting in Indonesia puts too much emphasis on stabilizing the domestic currency thus leading to benign neglect of stabilizing its external value, ultimately resulting in increased exchange rate volatility. These findings suggest that central bank credibility plays an important role in conducting inflation targeting policy which operates primarily through a signalling effect.

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.

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.

South Africa’s Trade Performance under Alternative Exchange Rate Regimes

2018 ◽  
Vol 10 (6) ◽  
pp. 261
Author(s):  
Romaine Patrick ◽  
Phocenah Nyatanga
Keyword(s):  
South Africa ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Exchange Rate Regime ◽  
Real Exchange Rates ◽  
Series Data ◽  
Growth Strategies ◽  
The Real ◽  
Real Price ◽  
Floating Exchange Rate

This study examined the effect exchange rates have on import and export volumes under alternative exchange rate policies adopted in South Africa over the period 1960 to 2017. Using quarterly time series data for the stated period, a log-linear error correction model is employed to estimate the country’s export and import elasticities, taking into account Gross Domestic Product (GDP), the real price of exports, the real price of imports and real exchange rates. Using the freely floating exchange rate regime as the base period, the study concluded that both export and import volumes are lower under a system of fixed exchange rates. Export and import volumes were also found to be lower under the dual exchange rate regime, relative to the freely floating exchange rate regime. In accordance with export-led growth strategies, exports were found to be higher and imports lower under a managed floating exchange rate regime. It is therefore recommended that South Africa revert to a more managed exchange rate regime, until the South African economy is developed to accommodate a freely floating exchange rate regime.

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