Tunaweza kusema Dolla ya Marekani umeshuka thamani lakini pia Shilingi ya Tanzania imeimarika.
Katika hali zote, zipo sababu nyuma yake ambazo zimepelekea hali hii.
Katika miezi michache
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Hali hii ya kushuka kwa kasi namba hii nayo inatishia Mlinganyo ya Biashara za kuuza na kununua nje.
Sasa kipi bora kwa uchumi wetu, Tuuze zaidi au Tununue zaidi toka nje!?
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Ikumbukwe kwa Msimu wa mavuno mwaka huu, tumesaidiwa na ukame uliozikumba Nchi za Zambia, Malawi n Muzambique ambapo ilibidi tuwauzie badala ya kununua kwao. Mwaka huu hali ni tofauti.
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Wanunuzi wa nje watatafuta masoko mbadala nasisi tutajua hatarini kiuchumi.
II Best Practices in Official Interventions in the Foreign Exchange Market
Author: Mr. Jorge I Canales Kriljenko
Mr. Cem Karacadag
Roberto Guimarães-Filho
and Mr. Shogo Ishii
Publication Date: 02 Mar 2006
Keywords:
OP;
intervention;
central bank;
order flow;
foreign currency;
intervention objective;
spot market intervention;
policy signal;
Exchange rates;
Currencies;
Currency markets;
Exchange rate arrangements; Exchange rate adjustments
II Best Practices in Official Interventions in the Foreign Exchange Market
Author: Mr. Jorge I Canales Kriljenko
, Mr. Cem Karacadag
,Roberto Guimarães-Filho
, and Mr. Shogo Ishii
Jorge Iván Canales-Kriljenko, Roberto Guimarães, and Cem Karacadag
This chapter provides an overview of the policy, technical, and administrative questions that must be addressed to effectively intervene in the foreign exchange market, particularly in developing economies with flexible exchange rate regimes. It includes a review of selected country experiences and the academic literature on operational aspects of official intervention. Key issues include the following:
Amount and timing. When and in what amounts should a central bank intervene in the foreign exchange market? Should official interventions be based on rules or discretionary? What market factors (liquidity, order flow, etc.) should be used to help determine the timing and amount of intervention?
Degree of transparency (secret versus public). Should central bank interventions be announced or kept secret? What are the pros and cons of secrecy versus openness?
Markets and counterparties. In which currency pair, instruments (spot or forward contracts), and trading locations (onshore or offshore) should intervention take place? With whom should the central bank trade (any authorized dealer or primary dealers), and how should it approach them (directly through agents, or through brokers) to achieve its intervention objectives?
The focus in this chapter is primarily on intervention under flexible exchange rate regimes. Under more rigid exchange rate arrangements, including various forms of pegs, central banks have little discretion over intervention policies. Official foreign currency sales and purchases automatically bridge the gap between supply and demand to ensure equilibrium at the predetermined exchange rate. The policy trade-offs and operational issues discussed here apply mainly to countries with independently floating or managed floating exchange rate regimes in which the monetary policy framework is not anchored by an exchange rate target.
Intervention can be defined as official purchases and sales of foreign exchange to achieve one or more of the following four objectives: (i) to moderate exchange rate fluctuations and correct misalignment, (ii) to address disorderly market conditions,1 (iii) to accumulate foreign exchange reserves, and (iv) to supply foreign exchange to the market. The aim is to capture what are known to be widely adopted policy objectives of foreign exchange operations in many developing countries to which the best practices advocated here are primarily intended to apply.
Following the convention in the literature, the definition of intervention in this paper is narrowed to …sterilized” intervention that does not affect domestic monetary conditions (base money or short-term interest rates). To the extent that a foreign exchange operation is not, or is only partially, sterilized, then the component that is left …unsterilized” is equivalent to a monetary policy operation.2
,
Keywords: OP; intervention; central bank; order flow; foreign currency; intervention objective; spot market intervention; policy signal; Exchange rates; Currencies; Currency markets; Exchange rate arrangements; Exchange rate adjustments
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Jorge Iván Canales-Kriljenko, Roberto Guimarães, and Cem Karacadag
This chapter provides an overview of the policy, technical, and administrative questions that must be addressed to effectively intervene in the foreign exchange market, particularly in developing economies with flexible exchange rate regimes. It includes a review of selected country experiences and the academic literature on operational aspects of official intervention. Key issues include the following:
Amount and timing. When and in what amounts should a central bank intervene in the foreign exchange market? Should official interventions be based on rules or discretionary? What market factors (liquidity, order flow, etc.) should be used to help determine the timing and amount of intervention?
Degree of transparency (secret versus public). Should central bank interventions be announced or kept secret? What are the pros and cons of secrecy versus openness?
Markets and counterparties. In which currency pair, instruments (spot or forward contracts), and trading locations (onshore or offshore) should intervention take place? With whom should the central bank trade (any authorized dealer or primary dealers), and how should it approach them (directly through agents, or through brokers) to achieve its intervention objectives?
The focus in this chapter is primarily on intervention under flexible exchange rate regimes. Under more rigid exchange rate arrangements, including various forms of pegs, central banks have little discretion over intervention policies. Official foreign currency sales and purchases automatically bridge the gap between supply and demand to ensure equilibrium at the predetermined exchange rate. The policy trade-offs and operational issues discussed here apply mainly to countries with independently floating or address disorderly market conditions,1 (iii) to accumulate foreign exchange reserves, and (iv) to supply foreign exchange to the market. The aim is to capture what are known to be widely adopted policy objectives of foreign exchange operations in many developing countries to which the best practices advocated here are primarily intended to apply.
Following the convention in the literature, the definition of intervention in this paper is narrowed to …sterilized” intervention that does not affect domestic monetary conditions (base money or short-term interest rates). To the extent that a foreign exchange operation is not, or is only partially, sterilized, then the component that is left …unsterilized” is equivalent to a monetary policy operation.2
How Can Intervention Be Effective?
Exchange rates are supposed to reflect basic supply and demand conditions, which in turn should be linked to underlying macroeconomic fundamentals. The literature provides favorable evidence on the relationship between exchange rates and fundamentals in the long term in economies with full capital mobility (Sarno and Taylor, 2002). The parity conditions also hold in developing economies with partial capital mobility (Tanner, 1998).
Exchange rates deviate substantially from values implied by fundamentals in the short term, even in well-functioning foreign exchange markets (Sarno and Taylor, 2002). Exchange rate movements violate the uncovered interest rate and purchasing power parity conditions and appear to be excessively volatile compared with underlying macroeconomic fundamentals (Mark, 2001). Moreover, macroeconomic models of exchange rate determination generally fail to outperform a naive random-walk model in out-of-sample forecasting at short time horizons (Rogoff, 1999).
The disconnect between short-term exchange rate levels and macroeconomic fundamentals creates a role for sterilized intervention. In particular, intervention may be used, possibly in conjunction with monetary policy, to stabilize market expectations, calm disorderly markets, and limit unwarranted exchange rate movements resulting from temporary shocks. Intervention may also be used in conjunction with policies to redress macroeconomic imbalances, and it can complement efforts to place macroeconomic policies on a sustainable path by resisting disruptive changes in the exchange rate, but only if there is a credible commitment to, and tangible progress on, macroeconomic adjustment.
Intervention is not an independent policy tool. Its effectiveness is based on the consistency of targeted exchange rates with macroeconomic policies. Moreover, with a high level of capital mobility, exchange rate and monetary policies cannot be conducted independently. Intervention is especially unlikely to be effective when adverse exchange movements reflect persistent macroeconomic imbalances. Protracted, one-
sided intervention on a large scale probably indicates that the current policy mix is unsustainable and that changes in exchange rate policy or other macroeconomic policies are necessary.3 Large capital inflows or fragility in the financial sector, for example, may require adjustments on several fronts, including the exchange rate, interest rates, and fiscal policies.
