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Foreign Exchange Rate Regimes and Foreign Exchange Markets in Transitive Economies

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  • Jaroslava Durčáková

Abstract

In this paper we discuss the issue of the choice of foreign exchange rate regimes in transitive economies, their effect on the relative changes and the volatility of the foreign exchange rate and the development of the national foreign exchange market. The results of our analysis indicate that the choice of the foreign exchange rate regime is not a passive factor regarding both average relative changes in exchange rates and volatility as measured by the standard deviation. They also show that increased volatility of spot rates and a growing interest rate differential lead to the growth of the share of outright forwards and swaps (e.g. transactions that might be used for hedging) in relation to spot transactions.

Suggested Citation

  • Jaroslava Durčáková, 2011. "Foreign Exchange Rate Regimes and Foreign Exchange Markets in Transitive Economies," Prague Economic Papers, Prague University of Economics and Business, vol. 2011(4), pages 309-328.
    • Handle: RePEc:prg:jnlpep:v:2011:y:2011:i:4:id:402:p:309-328
    DOI: 10.18267/j.pep.402
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    References listed on IDEAS

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    1. Mathias Hoffmann, 2007. "Fixed versus Flexible Exchange Rates: Evidence from Developing Countries," Economica, London School of Economics and Political Science, vol. 74(295), pages 425-449, August.
    2. Annamaria Kokenyne & Mr. Romain M Veyrune & Mr. Karl F Habermeier & Mr. Harald J Anderson, 2009. "Revised System for the Classification of Exchange Rate Arrangements," IMF Working Papers 2009/211, International Monetary Fund.
    3. Tomáš Holub, 1999. "Ceny v èeském zahranièním obchodì (Prices in Czech Foreign Trade)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 49(5), pages 253-267, May.
    4. J Lawrence Broz & Jeffry Frieden & Stephen Weymouth, 2008. "Exchange Rate Policy Attitudes: Direct Evidence from Survey Data," IMF Staff Papers, Palgrave Macmillan, vol. 55(3), pages 417-444, July.
    5. Tibor Hlédik, 2004. "Quantifying the Second-Round Effects of Supply-Side Shocks on Inflation," Prague Economic Papers, Prague University of Economics and Business, vol. 2004(2), pages 121-141.
    6. Martin Mandel & Vladimír Zelenka, 2009. "Ztráta centrální banky - účetní a ekonomický pohled na příkladě České národní banky [Central bank Losses. An Economic and Accounting Perspective Using the Example of the Czech National Bank]," Politická ekonomie, Prague University of Economics and Business, vol. 2009(6), pages 723-739.
    7. Williamson, J., 1991. "Advice on the Choice of an Exchange-Rate Policy," Papers 3, United Nations World Employment Programme-.
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    Cited by:

    1. Jaroslava Durčáková & Tomáš Kunz, 2012. "Exchange Rate Policy in Context of Financial Markets' Instability [Kurzová politika Ruska v kontextu nestability finančních trhů]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2012(2), pages 6-21.

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    More about this item

    Keywords

    transitive economies; foreign exchange market; foreign exchange rate; foreign exchange rate regime;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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