Exchange Rate Policy for MERCOSUR:- Lessons from the European Union

Among the Central-Eastern Europe countries which joined the European Union in 2004 only three – the smallest (Slovenia, Slovakia and Estonia) – joined the Eurozone. Within these economies the process of currency integration was diversified in respect to their previously used systems of exchange rate regimes. Also experiences concerning suppressing inflation and meeting the condition of prices stability varied among them. The aim of this article is to answer the question whether the mode of the applied exchange rate regime has an impact on achieving economical convergence with the Eurozone. I shall compare exchange rate regimes in Slovenia, Slovakia and Estonia in the period preceding joining the Eurozone. I shall also examine formation of inflation processes within the conditions of various exchange rate regimes existing in the analyzed countries as well as influence of the employed exchange rate regime policy on satisfying the criteria of convergence by those economies.

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Fear of Free Floating or Forced Exchange Rate Fixing

Voprosy Ekonomiki ◽

10.32609/0042-8736-2004-6-112-122 ◽

2004 ◽

pp. 112-122

Author(s):

O. Osipova

Keyword(s):

Exchange Rate ◽

Financial Crisis ◽

Exchange Rates ◽

Inflation Targeting ◽

Exchange Rate Policy ◽

Float Exchange Rate ◽

Floating Exchange Rate ◽

Rate Policy ◽

Exchange Rate Arrangements ◽

Pass Through

After the financial crisis at the end of the 1990 s many countries rejected fixed exchange rate policy. However actually they failed to proceed to announced "independent float" exchange rate arrangement. This might be due to the "fear of floating" or an irreversible result of inflation targeting central bank policy. In the article advantages and drawbacks of fixed and floating exchange rate arrangements are systematized. Features of new returning to exchange rates stabilization and possible risks of such policy for Russia are considered. Special attention is paid to the issue of choice of a "target" currency composite which can minimize external inflation pass-through.

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Exchange Rate Regimes and Economic Stability

Voprosy Ekonomiki ◽

10.32609/0042-8736-2010-1-29-43 ◽

2010 ◽

pp. 29-43

Author(s):

S. Smirnov

Keyword(s):

Exchange Rate ◽

Inflation Targeting ◽

Exchange Rate Regime ◽

Exchange Rate Policy ◽

Real Sector ◽

Economic Stability ◽

Exogenous Shocks ◽

Floating Exchange Rate ◽

Rate Policy ◽

Managed Floating

The Bank of Russia intends to introduce inflation targeting policy and exchange rate free floating regime in three years. Exogenous shocks absorption which stabilizes the real sector of economy is usually considered to be one of the advantages of free floating exchange rate policy. However, our research based on the analysis of 25 world largest economies exchange rates and industrial production during the crisis of 2008-2009 does not confirm this hypothesis. The article also analyzes additional risks associated with free floating exchange rate regime in Russia and presents some arguments in favor of managed floating exchange rate regime.

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On the Exchange Rate Policy

Voprosy Ekonomiki ◽

10.32609/0042-8736-2010-1-21-28 ◽

2010 ◽

pp. 21-28

Author(s):

K. Yudaeva

Keyword(s):

Monetary Policy ◽

Exchange Rate ◽

Inflation Targeting ◽

Exchange Rate Policy ◽

Institutional Changes ◽

Crisis Period ◽

Local Currency ◽

High Inflation ◽

Rate Policy ◽

The Exchange Rate

The level of trust in the local currency in Russia is very low largely because of relatively high inflation. As a result, Bank of Russia during crisis times can not afford monetary policy loosening and has to fight devaluation expectations. To change the situation in the post-crisis period Russia needs to live through a continuous period of low inflation. Modified inflation targeting can help achieve such a result. However, it should be amended with institutional changes, particularly development of hedging instruments.

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