Malaysia should peg the renggit to the price of rubber and natural gas

The Christensen family arrived in Malaysia yesterday. It is vacation time! So since I am in Malaysia I was thinking I would write a small piece on Malaysian monetary policy, but frankly speaking I don’t know much about the Malaysian economy and I do not follow it on a daily basis. So my account of […]

Should small open economies peg the currency to export prices?

Nominal GDP targeting makes a lot of sense for large currency areas like the US or the euro zone and it make sense that the central bank can implement a NGDP target through open market operations or as with the use of NGDP futures. However, operationally it might be much harder to implement a NGDP […]

‘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 […]

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 […]

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. […]

How to choose a ”good” monetary regime

My recent trip to Iceland and my discussions there about the possible future changes to Iceland’s monetary regime have inspired me a great deal in terms of organising some of my views on monetary matters in general. Market Monetarists are known for our advocacy of nominal GDP level targeting, but it is also well-known that […]

Recession time for Russia – the ultra wonkish version

I have long been a proponent of what I have called the Export Price Norm (EPN). The idea with EPN is that commodity exporting countries can ensure stable nominal spending growth by pegging their currency to either the price of the country’s main export good or to a basket of the export product and a […]

The Cedi Panic: When prayers don’t work you go for currency controls

The Ghanaian cedi has lost more than 30% against the US dollar over the past year and the sell-off in the currency has escalated since the beginning of the year as the Ghanaian markets have been hit by the same turmoil we have seen in other Emerging Markets. The sharp cedi sell-off has sparked widespread concerns […]

Listen to my new hero Jose Dario Uribe

The turmoil in the Emerging Markets currencies markets continues. Most EM central bankers seem to be very scared by the continued sell-off in Emerging Markets and central banks around the world have moved to hike interest rates and have intervened to curb the weakening of the Emerging Markets sell-off. This means that most EM central […]