After all, the pound has spent the past ten months above its old central rate in the European exchange-rate mechanism of DM2.95.
West and Central Africa's exchange rate no longer seems so overvalued as it did.
In terms of capital markets, interest rate liberalization and a more market-oriented exchange rate are central.
Instead of aiming for an exchange rate, their central banks have an inflation target.
The governor of the central bank enthuses about unifying the exchange rate, but declines to say what the country's foreign reserves are.
Asked about the trend for central banks to look less at inflation-targeting and more at policy areas that affect exchange rates, Mario Draghi, president of the European Central Bank, said earlier this month that the exchange rate was very important "as far as growth and stability" were concerned but was not a policy target for the ECB.
The central bank's website showed the exchange rate as 11, 180 rial to one US dollar.
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It is more flexible (with a floating exchange rate) and its central bank is still soundly run.
To avoid exchange-rate instability, central bankers might do this gradually.
The currency board will come to look like a central bank with a commitment to a fixed exchange rate.
They have surrendered control of the currency to an independent central bank that targets inflation, not the exchange rate.
The trade surplus leads to large inflows of foreign currency, which is bought up by the central bank in order to hold down the exchange rate.
The most potent criticism is that aiming for exchange-rate stability compromises the central bank in its task of controlling inflation one instrument (monetary policy) is being asked to do two things.
More than a year ago Hanke explained that Brazil's Plano Real, which pegged its currency to the dollar, dangerously quashed free market forces by giving the central bank the power to set both the exchange rate and monetary policies.
It seems the Ministry of Finance has ceded foreign exchange rate policy back to the Central Bank where it belongs. the bank has, for now, won the policy argument that further weakening of the real will be inflationary and lead to a stronger real exchange rate, says Tony Volpon, managing director at Nomura Securities in New York.
If a central bank buys foreign currency to hold down the exchange rate of the domestic currency, it creates more domestic money.
The weaker the reputation of the central bank, the stronger the case for pegging the exchange rate to build confidence that inflation will be controlled.
After watching the currency free-fall for several days, the Central Bank of Iceland stepped in Tuesday to fix the exchange rate of the krona at 175 a level equal to 131 krona against the euro.
If, as a result of capital inflows, there is an excess supply of foreign currency, the central bank must buy it and sell yuan to keep the exchange rate stable.
Foreign investors report presentations by the Central Bank mentioning a real (ie, inflation-adjusted) exchange rate that implies annual inflation of around 20%.
The yuan hit a high against the U.S. dollar under the current system Monday, after the central bank guided the currency to its strongest level via a reference exchange rate.
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South Korea's inflation has relatively contained in recent months, leaving the central bank with scope to cut rates to restore a modicum of exchange-rate stability.
Granted, that is small beer, given that prices have trebled since the central London property market took off after Britain was ejected from the exchange-rate mechanism in 1992.
Under a currency board arrangement, the central bank guarantees the redemption of all notes in circulation at a set exchange rate to the dollar or another foreign currency or basket of currencies.
Mundell is proposing, in effect, a de facto super-regional currency area by managing the exchange rate between the dollar and the euro through a process of central bank coordination.
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Many economists, including the heads of the US and British central banks, say China's high savings and its semi-fixed exchange rate helped cause the financial crisis by producing a glut of global liquidity.
The central bank is supposed to be independent, and is also supposed to be in charge of exchange-rate and monetary policy.
The central bank steered a careful course between providing liquidity for banks whose deposits were fleeing, and keeping the exchange rate stable.
Sergey Ignatiev, the man expected to become the new head of Russia's central bank, has said he does not want to see any "serious" changes to the country's exchange rate policy.
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