Posted on May 4, 2011 by iMFdirect
By Gustavo Adler and Camilo E. Tovar
(Version in Español)
Abundant global liquidity and high exposure to capital movements have put foreign exchange intervention at center stage of the policy debate in Latin America. Although intervention is widely used, there is limited evidence about its effects on the exchange rate, and particularly in terms of slowing the pace of currency appreciation.
In the latest Regional Economic Outlook: Western Hemisphere we took a fresh look at this issue, examining intervention practices and effectiveness for a group of economies in Latin America and other regions during 2004-10. In particular, we sought to answer the following questions:
- How do Latin American countries intervene and in what respects do they differ from other economies?
- What are the rationales for these policies?
- How effective have they been in affecting the exchange rate? Continue reading
Filed under: Economic outlook, International Monetary Fund, Latin America | Tagged: capital flows, currency appreciation, derivative markets, exchange rate misalignment, exchange rate regimes, exchange rates, foreign exchange intervention, intervention rules, liquidity conditions, overvalued currency, Regional Economic Outlook: Western Hemisphere, spot markets | 3 Comments »
Posted on April 21, 2011 by iMFdirect
By Leslie Lipschitz and Bas Bakker
For all the talk today about capital flows into emerging economies, the topic has actually been debated for many years within the IMF.
For a decade or more, we have grappled with the idea that very large capital flows into successful emerging market countries were almost inevitable and would prove extremely difficult to manage.
And now, with capital flows becoming larger and more volatile, old policy dilemmas are resurfacing with even greater force.
Filed under: Economic Crisis, Emerging Markets, Europe, Financial Crisis, International Monetary Fund | Tagged: asset price bubbles, capital flows, credit growth, current account deficits, exchange rate, exchange rate flexibility, exchange rate regimes, external vulnerability, fixed exchange rates, foreign currency exposure, foreign exchange risk, interest rates, investment, macroprudential policies, monetary policy, rates of return, risk premiums | 1 Comment »
Posted on December 15, 2010 by iMFdirect
By Leslie Lipschitz
(Version in Español | Français | عربي )
Countries rich in natural resources are often looked at with envy: they face few financial constraints and that should speed their development path. But the reality is less rosy. Countries with an abundance of natural resources—typically oil, gas or minerals—have, on average, performed less well than comparable non-resource rich countries.
That raises one of the perennial questions in economic policymaking. How to manage the economic and social challenges that stem from resource wealth? Or, to borrow the words of Professor Thorvaldur Gylfason (University of Iceland), how to prevent “nature’s bounty” from “becoming the curse of the common people”? Continue reading
Filed under: Africa, Civil Society, International Monetary Fund, Low-income countries, Middle East | Tagged: development, distribution of profits, exchange rate regimes, exploration costs, fiscal policy, gas, good governance, High Level Seminar on Natural Resources, investment strategy, minerals, monetary policy, natural resources, oil, resource wealth, sovereign wealth funds, stable macroeconomic environment, technical assistance, training | 3 Comments »