July 4th, 2009 () Capital › admin › Comments Off
As the capital account surplus is reduced while the current account deficit remains high, the pressure through the balance of payments is expressed through rising local interest rates and increasing downward pressure on the local currency. In order to maintain the peg, the central bank again intervenes, this time buying local currency (when capital was [...]
July 2nd, 2009 () Crisis › admin › Comments Off
The type of exchange rate regime is important for normal market trading conditions, but it is especially important for abnormal periods of market stress that may lead ultimately to a “currency crisis”. In the wake of the emerging market crises in Mexico (1994–1995), Asia (1997–1998), Russia (1998), Brazil (1999) and Turkey (2001), considerable effort has [...]