scholarly journals Managing Foreign Exchange Inflows: An Analysis of Sterilisation in Pakistan

2005 ◽  
Vol 44 (4II) ◽  
pp. 777-792
Author(s):  
Asad Jan ◽  
Ather Elahi ◽  
M. A. Zahid
Keyword(s):  
Foreign Exchange ◽  
Capital Inflows ◽  
Exchange Market ◽  
Foreign Exchange Reserves ◽  
Local Currency ◽  
Monetary Authorities ◽  
Export Competitiveness ◽  
Capital Outflows ◽  
Trade And Exchange

A number of developing countries from Asia, Latin America and Eastern Europe have experienced surge in capital inflows during recent years.1 These inflows have potential effects on macroeconomic stability; export competitiveness, and inflation. If not properly managed, these inflows can induce appreciation of local currency leading to serious repercussions for the rest of the economy. Under these conditions, the proactive role of monetary authorities in the management of capital inflows was highly desirable, wherein they intervened in the domestic exchange market in order to contain volatility in exchange rate besides accumulation of foreign exchange reserves. The main instruments available to deal with the possible effects of large capital inflows include sterilised intervention, fiscal tightening, trade and exchange liberalisation including easing controls on capital outflows. The foreign exchange interventions are typically accompanied by active sterilisation policy to keep inflation under control.

scholarly journals The Effectiveness and Sustainability of the Sterilization Policy in China

2014 ◽  
Vol 2014 ◽  
pp. 1-14 ◽  
Author(s):  
Chien-Ping Chung ◽  
Jen-Te Hwang ◽  
Chieh-Hsuan Wang
Keyword(s):  
Monetary Policy ◽  
Capital Mobility ◽  
Housing Price ◽  
Monetary Authority ◽  
Capital Inflows ◽  
International Capital ◽  
Foreign Exchange Reserves ◽  
Monetary Authorities ◽  
The Status ◽  
Almost All

The aim of this paper is to examine the sterilization policy in China. First, several indices are used to measure the status of China’s markets and to determine effectiveness and sustainability of the sterilization policy and the possible impacts it may have induced. Second, within a microeconomic framework, we incorporate the housing price variable into the target loss function of the monetary authority to explore its financial capabilities and evaluate the effectiveness and sustainability of China’s sterilization policy. The empirical results show that Chinese monetary authorities sterilize almost all of the effects of international capital inflows and increase foreign exchange reserves on the monetary base. That is, increased capital mobility does not sabotage the independence of the Chinese monetary policy. Nevertheless, analyses of the sustainability of sterilization policy indicate that the sustainability of the monetary sterilization policy has been seriously challenged since March 2008, which suggests that Chinese monetary authority has endured tremendous pressure for unsustainable sterilization.

scholarly journals The Role of the International Monetary Fund After the 2008 Crisis

2019 ◽  
Vol 10 (1) ◽  
pp. 60
Author(s):  
Marco Mele ◽  
Floriana Nicolai
Keyword(s):  
Foreign Exchange ◽  
United Arab Emirates ◽  
International Monetary Fund ◽  
Foreign Exchange Market ◽  
Exchange Market ◽  
Governance Reform ◽  
Extensive Introduction ◽  
The 2008 Financial Crisis ◽  
The International Monetary Fund

The purpose of this paper is to analyze the changes in the functions of the International Monetary Fund after the 2008 financial crisis. Following an extensive introduction concerning the subject of the study and which covers part of the economic literature, the focus was on governance reform and surveillance in the foreign exchange market. Finally, the empirical analysis was carried out concerning the manipulation of exchange rates in a period ranging from 2008-2016 and 15 countries (Taiwan, South Korea, Israel, China, Thailand, Macao, Switzerland, Hong Kong, Singapore, Norway, Qatar, United Arab Emirates, Kuwait, Trinidad and Tobago and Saudi Arabia) that in the period considered massively intervened in the foreign exchange market, keeping their respective currencies undervalued and acquiring an unfair competitive advantage to the detriment of partner economies. The results would tend to confirm that the manipulation of the exchange rate is a persistent and lasting element of the currency policies of the new millennium, highlighting an active insufficiency of the IMF’s action in the exercise of the oversight function on the currency policies of the Members.

scholarly journals Role of Oil Prices in Exchange Rate Devaluation: Risks of the Russian Ruble and Other Currencies

2019 ◽  
Vol 16 (4) ◽  
pp. 76-81
Author(s):  
V. Yu. Didenko ◽  
N. I. Morozko ◽  
N. I. Morozko
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Foreign Exchange ◽  
Current Account ◽  
Foreign Exchange Market ◽  
Oil Prices ◽  
Balance Of Payments ◽  
Exchange Market ◽  
The Exchange Rate

Subject and topic. Currently, the decrease in payments on foreign debts and a decrease in imports have an impact on the demand in the foreign exchange market. As a result, a situation has arisen due to the actions of the Bank of Russia, caused by threats of sanctions that provoked the absence of excessive demand and adequate supply in the foreign exchange market and led to a decrease in ruble exchange rate fl uctuations due to oil price movements.The subject of research is to determine the role of oil prices in the formation of monetary policy, which can be a key driver of economic growth.Objective. Identifi cation of exchange rate management practices with the search for the relationship between the current account of the balance of payments and the volatility of the national currency exchange rate.Research methods, the main provisions. Methods used grouping, comparing and summarizing economic indicators to study the characteristics and trends of the monetary policy of China, South Korea and Latin American countries.A critical analysis of the various points of view of leading scientists on the negative or positive impact of the exchange rate on the development of the economy was carried out. At the same time, it is interesting to analyze the views of individual economists that the dependence of the ruble exchange rate on oil prices has recently largely decreased.The main results of the study. Determination of the theoretical relationship between the price of oil and the exchange rate, based on the shock component, either in oil prices or in the exchange rate, with testing the response of the economic variable to this shock.Main conclusions. It was concluded that in the conditions of the economic situation of the last decade, the main problem of export-oriented and import-oriented countries is the imbalance of the current account of the balance of payments, as well as its relationship, primarily with the prices of export goods.

scholarly journals Analisis EMP Indonesia dan Empat Negara ASEAN pada Masa Krisis

2016 ◽  
Vol 16 (2) ◽  
pp. 105-122
Author(s):  
Clara Septyana Rahma Sulaeman ◽  
Vera Lisna
Keyword(s):  
Foreign Exchange ◽  
Foreign Exchange Rate ◽  
Economic Pressure ◽  
Exchange Market ◽  
Foreign Exchange Reserves ◽  
Exchange Market Pressure ◽  
Asean Countries ◽  
Exchange Rate Changes ◽  
Market Pressure ◽  
Method Show

Analysis of Indonesian EMP and Four ASEAN Countries During CrisisContagion effect or domino eect which causes spreading economic crisis from one country to another also occurred in Indonesia in 1997 and 2008. The effect was identified by Exchange Market Pressure (EMP) index which measures economic pressure faced by a country on the exchange market through foreign exchange rate changes and foreign exchange reserves. The results of EMP analysis in Indonesia and four ASEAN countries using VAR method show that EMP contribution of four ASEAN countries in 2008 was larger than that of 1997. Moreover, the 1997 crisis in Indonesia spread from Thailand, while the 2008 crisis spread from Singapore.Keywords: Exchange Market Pressure; Vector Autoregression; ASEAN Countries AbstrakContagion Effect atau efek domino yang merupakan salah satu penyebab menjalarnya krisis ekonomi dari suatu negara ke negara lain juga terjadi di Indonesia tahun 1997 dan 2008. Efek tersebut diidentifikasi dari indeks Exchange Market Pressure (EMP) yaitu ukuran tekanan ekonomi yang dihadapi suatu negara pada pasar valuta asing melalui perubahan nilai tukar dan cadangan devisa. Hasil analisis EMP Indonesia dan empat negara ASEAN menggunakan metode VAR menunjukkan kontribusi EMP empat negara ASEAN dalam menjelaskan EMP Indonesia tahun 2008 lebih besar dibandingkan tahun 1997. Selain itu, krisis tahun 1997 di Indonesia menjalar dari Thailand, sedangkan krisis tahun 2008 menjalar dari Singapura.

Toward the Policy Maker’s Vade Mecum

2018 ◽  
Author(s):  
Atish R. Ghosh ◽  
Jonathan D. Ostry ◽  
Mahvash S. Qureshi
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
Balance Sheet ◽  
Capital Controls ◽  
Policy Advice ◽  
Capital Inflows ◽  
Medium Term ◽  
Credit Growth ◽  
Monetary Authorities ◽  
Fx Market

This chapter provides concrete policy advice for dealing with capital inflows. In sum, once the monetary authorities have allowed the exchange rate to appreciate to a level that is not undervalued from a multilaterally consistent medium-term perspective, they may want to start intervening in the foreign exchange (FX) market to prevent further appreciation, sterilizing the intervention if there are inflationary pressures. If the economy shows signs of overheating, monetary and fiscal tightening might be necessary, together with macroprudential measures to contain excessive credit growth. To the extent these policies prove insufficient, the authorities need to consider bolstering them by imposing or tightening capital controls. At the same time, national authorities must be mindful of growing balance-sheet mismatches in the economy and should avail themselves of both prudential measures and capital controls to shift the composition of inflows toward less risky forms of liabilities.

Traders’ Engagement with Markets

2002 ◽  
Vol 19 (5-6) ◽  
pp. 161-185 ◽  
Author(s):  
Karin Knorr Cetina ◽  
Urs Bruegger
Keyword(s):  
Foreign Exchange ◽  
Social Relations ◽  
Foreign Exchange Market ◽  
The Self ◽  
Exchange Market ◽  
Computer Screen ◽  
Daily Work ◽  
Work Routines ◽  
Real Objects

This article focuses upon the construction of wants and the embodying of the market in the work routines of workers on the Swiss foreign exchange market. The authors are particularly concerned with the role of the computer screen within the establishment of postsocial relations around a sense of embodied lack. The screen does not provide access to the market but is the market as an exteriorized assemblage of practices brought together in one place. The screen is the (ontologically liquid) market rather than its representation into which traders immerse themselves. Traders engage with this market in their daily work practices through a constructed sense of lack that requires them to act passionately within the market in order to satisfy the self understood as a structure of wanting. While Knorr Cetina and Bruegger draw on a Lacanian understanding of the self as lack, rather than focus on the formation of direct human social relations around this issue, they look instead at the materiality of lack and its position within the postsocial relations constituted through trading online in the foreign exchange market. Desire is constituted and realized here through the object of the computer screen rather than with other people directly. In this way relations between persons are mediated by real objects that constitute persons virtually.

THE SIZE OF FOREIGN EXCHANGE RESERVES AND LOCAL CURRENCY INTERNATIONALIZATION: CROSS-COUNTRY EVIDENCE

2016 ◽  
Vol 61 (05) ◽  
pp. 1550081 ◽  
Author(s):  
ZHIWEN ZHANG
Keyword(s):  
Foreign Exchange ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
International Reserves ◽  
Chinese Government ◽  
Foreign Exchange Reserves ◽  
Major Power ◽  
Local Currency ◽  
Cross Country ◽  
Currency Internationalization

This paper produces the first cross-country evidence on the relationship between the size of foreign exchange reserves and local currency internationalization using a sample of Switzerland, Japan and the UK. It finds that a high ratio of foreign exchange reserves to international reserves has a significant, but negative, impact on local currency internationalization during the period 1976–2009. After controlling for interest rate differential, different indicators for long-run depreciation and volatility of exchange rates, as well as the once-in-a-century global financial crisis of 2007–2009, the above conclusion still holds. Additionally, these results are robust to different methods (Pooled OLS and Pooled IV/2SLS) and measures of the scale of foreign exchange reserves. This study is informative for any policy decisions and will provide a strategic reference for the Chinese government as it optimizes the composition of its international reserves, promotes the process of renminbi (RMB) internationalization and becomes a major power through financial development.

scholarly journals ANCAMAN CAPITAL INFLOW

INFORMASI ◽  
2011 ◽  
Vol 37 (1) ◽  
Author(s):  
Teguh Sihono ◽  
Rohaila Yusof
Keyword(s):  
Economic Growth ◽  
Central Bank ◽  
Foreign Exchange ◽  
Capital Inflow ◽  
Capital Inflows ◽  
Foreign Exchange Reserves ◽  
Short Term ◽  
Foreign Investors ◽  
Capital Assets ◽  
The Government

Capital inflow can be interpreted as an increase in the amount of money available from external or foreign sources for the purchase of local capital assets such as securities, houses, buildings, land, machinery. These short-term asset purchase, so if at any time be withdrawn in large quantities, it will endanger the country's economy. The swift flow of foreign funds may be a threat to the country which became the capital inflow in the form of options: pressure of inflation, high cost economy, the defisit Central Bank balance, the economic turbulence, and the threat of economic growth. Improvement of high economic growth accompanied by rising foreign exchange reserves that high also, it turns out is not free from the risk of unbridled inflation and economic cricis, destabilizing the economy during those funds withdrawn by foreign investors. For the avoidance of economic risk, should the government together with the Central Bank made a rule to direct capital inflow into the real sektor. Keywords: capital inflows, global likuiditas

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