Bank of Canada at the Zero Lower Bound: The Export Price Norm to the rescue

The continued drop in the oil prices have caused the Bank of Canada to reconsider whether it should cut it key policy rate – the Overnight rate – and in a speech earlier this week BoC governor Stephen Poloz said that he would not rule out negative interest rates in Canada even though he did […]

If anything the Bank of Canada should ease monetary conditions

While the Federal Reserve – rightly or wrongly – has initiated a rate hiking cycle it is not given the the central bank in neighboring Canada should follow suit. In fact, according to our our composited indicator for Canada monetary conditions monetary policy is too tight for the the Bank of Canada to hit its […]

The ‘Dollar Bloc’ continues to fall apart – Azerbaijan floats the Manat

I have for sometime argued that the quasi-currency union ‘Dollar Bloc’ is not an Optimal Currency Area and that it therefore is doomed to fall apart. The latest ‘member’ of the ‘Dollar Bloc’ left today. This is from Bloomberg: Azerbaijan’s manat plunged to the weakest on record after the central bank relinquished control of its […]

Oil exporters do not devalue to boost exports, but to stabilize public finances

Yesterday Azerbaijan’s central bank gave up its pegged exchange rate regime and floated the Manat. The Manat plummeted immediately and was essentially halved in value in yesterday’s trading. Azerbaijan is not the first oil exporter this year to have given up its fixed exchange rate policy. Kazakhstan did the same thing a couple of months […]

‘Currency instability’ should NOT be a concern for Canada

The commodity currencies of the world continues to take a beating on the back of the sharp drop in oil prices. This is now causing some to fear “currency instability”. Just these this story from Canada’s Financial Post: The Canadian dollar is falling too far and too fast, damaging public and business confidence in Canada, […]

PBoC should stop the silliness and float the RMB

This is morning we got this news (from Bloomberg): China’s central bank conducted the biggest reverse-repurchase operations since September, adding funds to the financial system after money-market rates surged and equities slumped. The People’s Bank of China offered 130 billion yuan ($19.9 billion) of seven-day reverse repos on Tuesday at an interest rate of 2.25 […]

Talking to my phone: The Gulf States should peg their FX rates to oil prices

Oops I did it again – this time I talk to my phone about monetary policy in the Gulf States and my suggestion that these countries should peg their currencies to the oil price or a basket of the oil price and the US dollar. This is of course what I have suggested should be […]

Kwanza devaluation is the right decision, but fundamental regime change is needed

This is from Reuters: Angola’s central bank devalued the kwanza currency by about 6 percent against the dollar, a statement showed, a move analysts said was aimed at stimulating foreign currency inflows eroded by falling global oil prices.  According to the bank’s latest update on the official exchange rate, issued late on Thursday, one U.S. […]

Oil-exporters need to rethink their monetary policy regimes

I started writing this post on Monday, but I have had an insanely busy week – mostly because of the continued sharp drop in oil prices and the impact of that on particularly the Russian rouble. But now I will try to finalize the post – it is after on a directly related topic to […]

The Colombian central bank should have a look at the Export Price Norm

Yesterday I wrote a short blog post praising Colombian central bank governor Jose Dario Uribe for not fighting ten weakening of the Colombian peso. This post is a follow-up post. It is slightly less positive about the performance of the Colombian central bank, but I also give some policy advise (for free!) to Uribe and […]