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.
The downgrade of the local currency ratings of Botswana to the level of its foreign-currency ratings is largely based on its crawling peg
and underdeveloped domestic debt market, S&P said.
In addition, China and Vietnam have officially adopted a type of managed float known as a "crawling peg
"--that typically includes either the gradual appreciation or depreciation of the currency over time against one or more currencies.
In order to explore the implications of the exchange rate system, a regime of completely flexible exchange rates is compared to a crawling peg
regime and to a regime of fixed exchange rates.
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.
In October 1991, the fixed rate was abandoned and a preannounced crawling peg
system was introduced.
Equation (3) defines the exchange rate regime of the country as a passive crawling peg
. Parameter [phi] determines the extent to which devaluation compensates for past inflation, with [phi] = 0 corresponding to a fixed exchange rate regime and [phi] = 1 corresponding to real exchange rate targeting.
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.