In Zimbabwe, the black-market exchange rate is nearly ten times the official one.
Its operating agreement with Argentina stipulated that tariffs should be in dollars, adjusted for inflation in the United States and converted to pesos at the market exchange rate.
In terms of capital markets, interest rate liberalization and a more market-oriented exchange rate are central.
Indeed, studies have shown that even when emerging-market economies say they are floating (as Malaysia, for example, used to), they tend to rely more heavily than the industrial countries do on interest-rate policy and foreign-exchange market intervention to limit actual movements in the exchange rate.
The idea was a cold-turkey cure for endemic balance-of-payments problems, turning economic management on its head by floating sterling and letting the market dictate the exchange rate.
Investing in international markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation.
The gap between the official exchange rate and the rate in the swap market has widened to nearly 20%.
Now, dollars sell on the black market at three times the official exchange rate and Maduro has had to devalue Venezuela's currency, the bolivar, twice this year.
In a bid to offset the impact of sterling's rise and remain competitive with duty-free shops abroad, Heathrow's shops are offering travellers who pay in various foreign currencies a more favourable exchange rate than the current market rate.
Market gyrations followed, and by September the exchange rate had fallen to five dollars.
No wonder, then, that emerging-market economies are confused about the right exchange-rate regime to pursue.
Groupon said it had been hit by an unfavourable exchange rate and a weak European market.
Venezuela Keeps Official Exchange Rate Despite Flourishing Currency Black Market Trade.
CENTERFORSECURITYPOLICY: Venezuela Brief: Countdown to Tyranny I
One big difference is that Australia, unlike the East Asians before their currencies plunged, has a floating exchange rate which can adjust smoothly to market pressures.
The government has abolished jail terms for those caught dealing in foreign currency, offered extra incentives for private investment and brought the official exchange rate closer to the black-market one.
The central bank had tried selling the currency at that level on the interbank market for foreign currency, which is how its exchange rate is normally determined, but gave up when no one would buy it.
There was now a market price for all of them, reflected in the exchange rate.
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.
Toyota has not been shy about using profits from a competitive exchange rate to finance its drive for a bigger market share.
This action targets those people that have been using credit cards as a way to purchase at the official rate rather than the black market rate, in effect creating a dual credit card exchange regime.
The lack of a developed financial market has the flipside of making it difficult for the central bank to inject or withdraw kyat liquidity or to intervene in the dollar market as a way of combatting any sharp moves in the exchange rate, as most of it occurs with back-alley money changers.
"I think what they will talk about is not the exchange rate per se, but the importance in allowing market determination of exchange rates, " says Baily, who added that it is his opinion that the dollar probably needs to decline by another 15% to 20% in order to make a serious dent in the deficit.
It also managed to narrow the gap between the official exchange rate and the price of the dollar in the free market.
Now take a look at the chart, which plots a foreign exchange rate along with a price index for the global stock market.
The problem, however, is that policymakers may not want to make their domestic monetary policies subject to formal exchange-rate targets for the sake of global currency-market stability.
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.
Japan's exports also moved swiftly up the value chain, but whereas this was not enough to support durable gains in its market share, China has the advantage of capital controls that will prevent its exchange rate rising as abruptly as Japan's did in the 1980s.
With hyperinflation, a gap of around 10:1 has opened up between the official exchange rate operated by the bank and the true rate reflected in the black market.
应用推荐