Progress in this area with a more flexible monetary policy, rather than a return to a crawling peg
, might be beneficial for the country.
The crawling peg
lasted until June 1982 when the Government introduced a wage and price freeze as part of a heterodox approach to markedly reduce the high inflation rate.
rate within horizontal bands (3) Crawling peg
(8) Iraq Iran Crawling band (2) Azerbaijan Managed floating with Algeria no pre-determined path for the exchange rate (44) Independently floating (40) Exchange rate Inflation arrangement (Number Monetary targeting Other1 of countries) aggregate framework target (22) (44) (11) Other conventional fixed peg arrangement (68) Pegged exchange rate within horizontal bands (3) Crawling peg
(8) Crawling band (2) Managed floating with Armenia Egypt no pre-determined path (6) India for the exchange rate (44) Independently Cyprus Malta (7) Somalia floating (40) (7)Israel Turkey (8) Source: The IMF Variable Coefficient Std.
This has led some analysts to assert that China and Vietnam have abandoned the crawling peg
in favor of either a pegged exchange rate or a managed float.
All variables show expressive changes in the periods of international financial crises, with the exception of the exchange rate in the period of a crawling peg
exchange rate system.
On the other hand, in the simulations with a crawling peg
regime and with fixed exchange rates, the Slovenian short-term interest rate is determined by the exchange rate and by the short-term interest rate in the Euro Area.
By the same token, the yuan's crawling peg
and the consequent rapid build-up of foreign reserves have led to excessive liquidity growth and created serious economic distortions, notably in the asset markets where asset price inflation has been rampant.
Another option was widening the fluctuation band and following a crawling peg
to the US dollar.
Equation (3) defines the exchange rate regime of the country as a passive crawling peg
The plan limited the lira's depreciation through a crawling peg
exchange rate, while imposing budgetary restraint and structural reforms to cut state spending and modernise the economy.
The fiscal loosening goes well beyond the working of automatic stabilisers and risks conflicting with the ambitious monetary objectives adopted after the monetary regime change in mid-2001, when the crawling peg
was abandoned, the fluctuation band of the currency widened and new inflation targets dedicated to meeting the EMU inflation criteria within a few years introduced.
The EU pinpoints the weaknesses of the stabilisation programme - particularly insufficient attention to the restructuring of the banking sector and to other structural reforms - as the causes of the financial crises in November 2000 and February 2001, when the Turkish authorities had to abandon the crawling peg
exchange rate regime, which had been at the heart of the stabilisation programme.