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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 ...
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.

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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.

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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. 
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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.
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Upcoming Offering

Start date End date Location Delivery Method Session No. Primary & (Interpretation) language Apply
May 26, 2025 June 6, 2025 Vienna, Austria In-person Training JV 25.14 English (Russian) Apply online by February 16, 2025
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