IMF | STI

Details

Start: 
December 2, 2024

End:
December 13, 2024

Course Number:
ST24.20

Application Deadline

July 5, 2024

In-Person : Exchange Rate Policy (ERP)

December 2 - 13

Target Audience

Junior to mid-level officials who work with exchange rate policy and analysis.

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.

Course Description

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 Market Economies (concerns of excessive volatility; de jure vs. de facto regimes; competitiveness, price stability; exchange-rate pass-through; targets and instruments).  
• Transitions from rigid to flexible exchange rates regimes (motives; speed of transition; deep and liquid domestic FX markets, derivatives markets, coherent intervention policy, nominal anchor; transition sequence).   
• FX interventions (sterilized or non-sterilized; motivations, channels, effectiveness, instruments, tactics, policy communication).  
• Currency crisis (causes, role of macroeconomic and prudential policies).  
• Assessing reserve adequacy (ARA).  
• External Balance Assessment (EBA).  
• Early warning system.

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.