Exchange Rate Developments and Policies in the Caucasus and Central Asia

By Mark A Horton, Hossein Samiei, Natan P. Epstein, Kevin Ross

May 16, 2016

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Mark A Horton, Hossein Samiei, Natan P. Epstein, and Kevin Ross. Exchange Rate Developments and Policies in the Caucasus and Central Asia, (USA: International Monetary Fund, 2016) accessed November 23, 2024

Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Since late 2014, exchange rates (ERs) and ER regimes of the Caucasus and Central Asia (CCA) countries have come under strong pressure. This reflects the decline of oil and other commodity prices, weaker growth in Russia and China, depreciation of the Russian ruble, and appreciation of the U.S. dollar, to which CCA currencies have historically been linked. Weaker fiscal and current account balances and increased dollarization have complicated the picture. CCA countries entered this period with closely managed ER regimes and, in many cases, currencies assessed by IMF staff to be overvalued. CCA central banks have price stability as their main policy objective, and most have relied on ER stability to achieve this objective. Thus, the first policy response involved intervention in local foreign exchange (FX) markets, often with limited communication. In this context, the IMF staff has reviewed ER policy advice and implementation strategies for CCA countries.

Subject: Banking, Communications in revenue administration, Currencies, Dollarization, Foreign exchange, Monetary policy, Monetary policy frameworks, Money, Revenue administration

Keywords: CCA central banks, CCA country, Central bank, Central bank communications, Communications in revenue administration, Country, Currencies, Dollarization, DP, DPPP, ER flexibility, ER policy, ER Policy framework, ER regime, Global, Government, High ER, Monetary policy frameworks

Publication Details

Pages:

43
Volume:

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DOI:

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Issue:

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Series:

Departmental Paper No. 2016/007
Stock No:

ERDPCCEA
ISBN:

9781513543031
ISSN:

2616-5333

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