Connect with IMF Institute

Exchange Rate Policy (ERP)

Monetary, Exchange Rate, and Capital Account Policies

This course, presented by the Institute for Capacity Development, gives a comprehensive overview of exchange rate analysis and policy. Topics covered include:  

  • Key exchange rate concepts (real, nominal, bilateral, multilateral, spot, forward) and arbitrage conditions (UIP, law of one price, PPP, relative PPP); its role in achieving internal and external balance (adjustment to overall equilibrium under floating and fixed exchange rate regimes); its role in economic growth (undervaluation, Washington Consensus, the Balassa-Samuelson effect).  
  • Exchange rate policy and regimes (taxonomy, impossible trinity) and associated policy mix (monetary policy independence, financial stability, fiscal policy, capital controls).  
  • Practical Problems of Exchange Rate Policy in Developing and Emerging Market Economies (concerns of excessive volatility; de jure vs. de facto regimes; competitiveness, price stability; exchange-rate pass-through; targets and instruments).  
  • Transitions from rigid to flexible exchange rates regimes (motives; speed of transition; deep and liquid domestic FX markets, derivatives markets, coherent intervention policy, nominal anchor; transition sequence).   
  • FX interventions (sterilized or non-sterilized; motivations, channels, effectiveness, instruments, tactics, policy communication).  
  • Currency crisis (causes, role of macroeconomic and prudential policies).  
  • Assessing reserve adequacy (ARA).  
  • External Balance Assessment (EBA).  
  • Early warning system.
Read More Topic : Monetary Exchange Rate and Capital Account Policies

    Target Audience

    Junior to mid-level officials who work with exchange rate policy and analysis.

    Back to top

    Qualifications

    Participants are expected to have an advanced degree in economics or equivalent professional experience and be comfortable with Microsoft Excel and Excel-based applications.  Participants are expected to also have a working knowledge of EViews.

    Back to top

    Course Objectives

    Upon completion of this course, participants should be able to: 

    • Assess reserve adequacy with traditional and the IMF ARA metric.  
    • Assess external balance position with EBA and EBA-lite methodologies.  
    • Construct systems for early warning of currency crises using data on nominal exchange rates and international reserves. 
    • Describe the exchange rate regime choice and how country-specific features could influence the choice. 
    Back to top

    Syllabus: {9499CFFE-459C-4258-BB24-F1A572819BB1}

    This course presents a comprehensive overview of exchange rate analysis and policy. The first part of the course introduces key definitions and concepts used in exchange rate analysis, including that of real exchange rate misalignment. It then discusses how changes in the real exchange rate may affect external adjustment and growth. The second part focuses on macroeconomic volatility and capital flows. It analyzes the role of foreign exchange intervention and international reserve adequacy. The third part covers the macroeconomic policy tradeoffs under different exchange rate regimes and the main exchange rate policy challenges in developing and emerging market economies, such as the use of hybrid regimes, forced and unforced exits from pegs, and the reasons behind the so-called Fear-of-Floating. The fourth part looks into real exchange rate equilibrium and misalignment. It elaborates on and uses the External Balance Assessment (EBA) methodology to that end. Finally, before participants’ presentations, the course moves to currency crises. It presents the Early Warning System to monitor such events.
    Back to top

    Upcoming Offering

    Start date End date Location Delivery Method Session No. Primary & (Interpretation) language Apply
    March 18, 2024 March 29, 2024 Ebene, Mauritius Virtual Training AT 24.07V English (French, Portuguese) Deadline passed
    June 3, 2024 June 14, 2024 Vienna, Austria In-person Training JV 24.17 English (Russian) Apply online by March 3, 2024
    December 2, 2024 December 13, 2024 Singapore, Singapore In-person Training ST 24.20 English Apply online by July 5, 2024
    Back to top

    Apply Now - Application deadline approaching:

    IMF offers online training to government officials and the public. Click Learn more to find our current offerings.

    Financial Sector Policies (FSP)

    Spanish | June 3-14, 2024 | In-person Training | Washington, D.C., United States

    Apply online by February 25, 2024

    Macroeconometric Forecasting and Analysis (MFA)

    English (French, Portuguese) | March 25, 2024 - April 5, 2024 | In-person Training | Ebene, Mauritius

    Apply online by February 25, 2024

    Safeguards Assessments of Central Banks (SAC)

    English | May 6-10, 2024 | In-person Training | Vienna, Austria

    Apply online by February 25, 2024

    Virtual : Financial Market Infrastructures: Principles and Practices (FMI-PP)

    English (French, Portuguese) | March 11-15, 2024 | Virtual Training | Ebene, Mauritius

    Apply online by February 25, 2024

    International Tax Administration

    English | April 1-5, 2024 | In-person Training | New Delhi, India

    Apply online by February 26, 2024