Critics of Canada's current flexible exchange rate
point in particular to the currency's depreciation since 1990.
Thus, the Federal Reserve and other central banks operating under flexible exchange rate
regimes still have the tools required to implement monetary policy, even if the more global environment adds some uncertainty about the multiplier effects of these tools.
The point that most concerned later critics, variability or instability, is dismissed very early with a claim that exchange rate instability reflects instability in the economy and is not a property of the flexible exchange rate
The much-discussed increase in the variability of real exchange rates in a flexible exchange rate
regime may reflect only that flexible exchange rates
change more frequently, whereas the relative price ratios are not much affected by the change in regime.
I shall discuss, in turn, traditional elements in the fixed versus flexible exchange rate
debate, the idea of "currency substitution" which lies at the heart of its modern version, and the relevance of the so-called "legal restrictions" approach to monetary theory.
Furthermore, increased credibility of the macroeconomic policy framework, a strengthened financial system, relatively modest external debt levels, and a flexible exchange rate
helped Colombia weather the external shocks emanating from the global financial crisis.
The build-up in international reserves and a more flexible exchange rate
confer greater policy flexibility to manage shocks.
While the local currency, the peso, has posted more recent gains versus the US dollar, Espenilla said the BSP will continue to pursue a flexible exchange rate
as its first line of defense against potential shocks in the foreign exchange market this year.
We welcome the CBE's decision to liberalise the foreign exchange system and adopt a flexible exchange rate
Rice hailed Egypt's passing of the budget, approval of Value Added Tax (VAT), plan on energy subsidies, and its central bank's commitment to gradually move to a more flexible exchange rate
Most importantly, the survey data highlights the ongoing need to move to a more flexible exchange rate
system in order to achieve a market-clearing rate for the EGP," said Jean-Paul Pigat, Senior Economist at Emirates NBD.
It also said that it would adopt a more flexible exchange rate
policy to help ease an acute dollar shortage that is weighing on the already struggling, import-dependent economy.