Exchange rate and foreign interest rate linkages for Sub-Saharan Africa floaters [electronic resource] / prepared by Alun Thomas.

By:

Thomas, Alun H. (Alun Huw) [author.]

Contributor(s):

International Monetary Fund. African Department

Material type: Text

TextSeries: IMF working paper ; WP/12/208.Publication details: [Place of publication not identified] : International Monetary Fund, 2012.Description: 1 online resource : illustrationsContent type:

text

Media type:

computer

Carrier type:

online resource

ISBN:

1475586477
9781475586473

Subject(s):

Genre/Form:

Electronic books.

DDC classification:

332.456096 23

LOC classification:

HG3982

Online resources:

EBSCOhost

Summary: The paper considers the determinants of exchange rate movements among sub-Saharan countries that have flexible exchange rate regimes. The determinants are based on the law of one price and interest parity conditions. Results indicate that the exchange rates have responded significantly to changes in the US Treasury bill rate and to the EMBI spread in recent years. The effects are more important for countries with open capital accounts. On the other hand the paper does not provide any support for the interest rate parity theory because domestic interest rates have no bearing on exchange rate movements.

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Title notes ( 2 )

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Includes bibliographical references.

The paper considers the determinants of exchange rate movements among sub-Saharan countries that have flexible exchange rate regimes. The determinants are based on the law of one price and interest parity conditions. Results indicate that the exchange rates have responded significantly to changes in the US Treasury bill rate and to the EMBI spread in recent years. The effects are more important for countries with open capital accounts. On the other hand the paper does not provide any support for the interest rate parity theory because domestic interest rates have no bearing on exchange rate movements.