From Fixed to Float: Operational Aspects of Moving towards Exchange Rate Flexibility

By . Gilda C Fernandez, Cem Karacadag, Rupa Duttagupta

July 1, 2004

Preview Citation

Format: Chicago

. Gilda C Fernandez, Cem Karacadag, and Rupa Duttagupta. From Fixed to Float: Operational Aspects of Moving towards Exchange Rate Flexibility, (USA: International Monetary Fund, 2004) accessed September 20, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper identifies the institutional and operational requisites for transitions to floating exchange rate regimes. In particular, it explores key issues underlying the transition, including developing a deep and liquid foreign exchange market, formulating intervention policies consistent with the new regime, establishing an alternative nominal anchor in the context of a new monetary policy framework, and building the capacity of market participants to manage exchange rate risks and of supervisory authorities to regulate and monitor them. It also assesses the factors that influence the pace of exit and the appropriate sequencing of exchange rate flexibility and capital account liberalization.

Subject: Currency markets, Exchange rate arrangements, Exchange rate flexibility, Exchange rate risk, Exchange rates, Financial markets, Financial regulation and supervision, Foreign exchange

Keywords: Africa, Capital account, Crawling peg, Currency markets, Delegating exchange control authority, East Asia, Exchange rate arrangements, Exchange rate flexibility, Exchange rate policy, Exchange rate regime, Exchange rate risk, Exchange rates, Floating exchange rate, Foreign exchange market activity, Foreign exchange markets, Increase market information, Intervention, Market activity, Market illiquidity, Market participant, Market pressure, Market transparency, Market uncertainty, Market-making role, Nominal exchange rate, Stabilization program, Well-functioning foreign exchange market, WP

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/126
Stock No:

WPIEA1262004
ISBN:

9781451854930
ISSN:

1018-5941

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