From Fixed to Float: Operational Aspects of Moving Toward Exchange Rate Flexibility

39 Pages Posted: 15 Feb 2006

See all articles by Rupa Duttagupta

Rupa Duttagupta

International Monetary Fund (IMF)

Gilda Fernandez

affiliation not provided to SSRN

Date Written: July 2004

Abstract

This paper identifies the institutional and operational requisites for transitions to floating exchange rate regimes. In particular, it explores key issues underlying the transition, including developing a deep and liquid foreign exchange market, formulating intervention policies consistent with the new regime, establishing an alternative nominal anchor in the context of a new monetary policy framework, and building the capacity of market participants to manage exchange rate risks and of supervisory authorities to regulate and monitor them. It also assesses the factors that influence the pace of exit and the appropriate sequencing of exchange rate flexibility and capital account liberalization.

Keywords: Exchange rate policy, foreign exchange markets, intervention, capital account

JEL Classification: F3, F31

Suggested Citation

Duttagupta, Rupa and Fernandez, Gilda, From Fixed to Float: Operational Aspects of Moving Toward Exchange Rate Flexibility (July 2004). IMF Working Paper No. 04/126, Available at SSRN: https://ssrn.com/abstract=878950

Rupa Duttagupta (Contact Author)

International Monetary Fund (IMF) ( email )

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Gilda Fernandez

affiliation not provided to SSRN

No Address Available

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