## Exchange Rate Policy (ERP)

## Source details

**Canonical URL:** [Exchange Rate Policy (ERP)](https://www.imf.org/en/capacity-development/training/icdtc/schedule/sa/2023/erpsa23-34)

## Other formats

- [Markdown version](/en/capacity-development/training/icdtc/schedule/sa/2023/erpsa23-34/index.md)
- [Structured JSON version](/en/capacity-development/training/icdtc/schedule/sa/2023/erpsa23-34/index.json)
- [Bundle manifest](/en/capacity-development/training/icdtc/schedule/sa/2023/erpsa23-34/bundle-manifest.json)

## Bibliographic details
- Session: SA 23.34
- Location: New Delhi, India
- Dates: October 30, 2023 - November 9, 2023 (2 weeks)
- Delivery method: In-person Training
- Primary language: English
- Status: Deadline passed

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### Qualifications and prerequisites
- Expected qualifications: advanced degree in economics or equivalent professional experience.
- Technical skills: comfortable with Microsoft Excel and Excel-based applications.
- Recommended prior courses: Financial Programming and Policies (FPP) or Macroeconomic Diagnostics (MDS).
- Additional expected skills: working knowledge of Word, Excel, PowerPoint, and EViews.

### Course description — topics covered
- Key exchange rate concepts (real, nominal, bilateral, multilateral, spot, forward).
- Arbitrage and exchange rate conditions (uncovered interest rate parity, law of one price, purchasing power parity (PPP), relative PPP).
- Real exchange rate equilibrium; role of the (real) exchange rate in achieving internal and external balance; adjustment to overall equilibrium under floating and fixed exchange rate regimes.
- Link between the real exchange rate and growth; exchange rate growth strategies (undervaluation, Washington Consensus); the Balassa-Samuelson effect.
- Exchange rate regimes (taxonomy, choice of regime; benefits and costs of floating; the policy mix: impossible trinity; exchange rate regimes in historical context).
- Exchange rate policy and the policy mix (monetary policy independence; overvaluation; external adjustment; exchange rate volatility and financial stability; exchange rate regime and trade integration; nominal anchor; fiscal policy; capital controls).
- Practical Problems of Exchange Rate Policy in Developing and Emerging Market Economies (concerns of excessive exchange rate volatility; de jure vs. de facto regimes; competitiveness, price stability; exchange-rate pass-through; dollarization and currency mismatches; political economy of exchange rates; implementation of exchange rate policies; targets and instruments). Presentation of country cases.
- Transitions from rigid to flexible exchange rates regimes (motives; speed of transition; supporting elements: deep and liquid domestic FX markets, setting and regulation of derivatives markets, coherent intervention policy, choice of nominal anchor; transition sequence).
- FX interventions (sterilized and non-sterilized FX interventions; impact on monetary policy; motives for intervention; instruments used for intervention; channels and effectiveness of FX interventions; tactics of FX interventions; foreign exchange intervention communication policy, rules vs. discretion).
- Currency crisis (causes, role of macroeconomic and prudential policies).
- International reserve adequacy (ARA) metric.
- External Balance Assessment (EBA).
- Early warning system.

### Course objectives — learning outcomes
- Assess whether FX reserves are adequate using standard and new indicators of reserve adequacy.
- Assess the effectiveness of interventions in the FX market, using case studies of interventions.
- Measure the degree of real exchange rate misalignment using different models and methods, including the EBA.
- Construct systems for early warning of currency crises using data on nominal exchange rates and international reserves.
- Estimate the probability of experiencing a currency crisis using panel data econometric techniques.
- Describe the exchange rate regime choice and how country-specific features could influence the choice.
- Identify policy inconsistencies that may lead to currency crises.
- Identify policy measures to prevent them.

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## References

- [In-person Training](https://www.imf.org/en/capacity-development/training/icdtc/delivery-methods)
- [Executive Training 2 on Fiscal Policy Considerations (FPA)](https://www.imf.org/en/capacity-development/training/icdtc/schedule/ce/2026/fpcce26-16)
- [Tax Regional Workshop on Strategic Management](https://www.imf.org/en/capacity-development/training/icdtc/schedule/ce/2026/taxce26-43)
- [Institutional Sector Accounts-Advanced - Blended (ISA-A)](https://www.imf.org/en/capacity-development/training/icdtc/schedule/hq/2027/isa-ahq27-02)

_Source: https://www.imf.org/en/capacity-development/training/icdtc/schedule/sa/2023/erpsa23-34_