A Note on Dual/Multiple Exchange Rates
Fan, Emma Xiaoqin | May 2004
Abstract
Exchange rates measure the relative prices of different currencies. Usually each country has one official exchange rate regime. Occasionally, however, countries implement dual or multiple exchange rate regimes (DMERs). Currently, five of the Asian Development Bank's (ADB) developing member countries (DMC) have DMERs in place. DMERs have significant economic implications. In particular, DMERs have largely failed to deliver the beneficial outcomes intended by policymakers and caused various detrimental effects in developing countries.
Past experience demonstrates that DMERs are not a quick solution to underlying balance of payments and other economic problems. As such, a dual exchange rate system needs to be transitional in nature. However, too often they are put in place for too long, causing substantial economic damage. Thus, extreme caution must be exercised when considering introducing DMERs. Once in place, steps must be taken to unify the exchange rates as soon as possible.
Citation
Fan, Emma Xiaoqin. 2004. A Note on Dual/Multiple Exchange Rates. © Asian Development Bank. http://hdl.handle.net/11540/572. License: CC BY 3.0 IGO.ISSN
1655-5260
Keywords
Trade Finance
Rural Finance
Regional Development Finance
Public Financial Management
Public Finance
International Finance
Intergovernmental Finance
Financial System
Financial Flows
Financial Assets
Finance And Trade
Trade Finance
Local Finance
International Monetary Relations
Local Finance
Banks
Capital Market
financial statistics
Foreign trade
Municipal government
Metropolitan government
International banks and banking
Capital movements
Central banks and banking
Bills of exchange
Swaps
Banks and banking
Stock exchanges
Market
Exchange
Balance of trade
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Citable URI
http://hdl.handle.net/11540/572Metadata
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