Exchange Rate Policy (ERP)
Source details
- Canonical URL
- Exchange Rate Policy (ERP)
Other formats
Bibliographic details
- Session: CE 24.25
- Location: Kuwait City, Kuwait
- Dates: October 27, 2024 - November 7, 2024 (2 weeks)
- Delivery method: In-person Training
- Primary language: English
- Status: Deadline passed
Target audience and qualifications
- Target Audience: Junior to mid-level officials who work with exchange rate policy and analysis.
- Qualifications:
- Participants are expected to have an advanced degree in economics or equivalent professional experience.
- Participants are expected to be comfortable with Microsoft Excel and Excel-based applications.
- Participants are expected to also have a working knowledge of EViews.
Course description — topics covered
- Key exchange rate concepts:
- real, nominal, bilateral, multilateral, spot, forward
- arbitrage conditions: UIP, law of one price, PPP, relative PPP
- Role of exchange rates in macroeconomic objectives:
- achieving internal and external balance (adjustment to overall equilibrium under floating and fixed exchange rate regimes)
- role in economic growth (undervaluation, Washington Consensus, the Balassa-Samuelson effect)
- Exchange rate policy and regimes:
- taxonomy, impossible trinity
- associated policy mix: monetary policy independence, financial stability, fiscal policy, capital controls
- Practical problems 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 rate 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:
- External Balance Assessment:
- Early warning systems:
- constructing systems for early warning of currency crises
Course objectives
- 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.
References