5 billion rescue packet from the IMF, the World Bank and the international financial community to stabilize the Brazilian economy and to defend the crawling peg
of the R$ to the US$, with a yearly nominal devaluation of 7.
By the same token, the yuan's crawling peg
and the consequent rapid build-up of foreign reserves have led to excessive liquidity growth and created serious economic distortions, notably in the asset markets where asset price inflation has been rampant.
Another option was widening the fluctuation band and following a crawling peg
to the US dollar.
Equation (3) defines the exchange rate regime of the country as a passive crawling peg
The plan limited the lira's depreciation through a crawling peg
exchange rate, while imposing budgetary restraint and structural reforms to cut state spending and modernise the economy.
Financial turmoil forced the government last month to dismantle a crawling peg
for the lira, which has since plunged against the dollar by about 30%.
The zloty's peg was abandoned in October of 1991, replaced by a crawling peg
with a preannounced devaluation of 1.
As the recent experiences of Brazil and Indonesia show, even the much-vaunted crawling peg
does not work when fundamental macroeconomic weaknesses predominate.
Replacing the band with either a crawling peg
or a floating currency would have positive implications for Colombia`s short-term credit outlook, as it would allow interest rates to maintain a downward trend and it would protect existing foreign exchange reserves.
If this analysis is correct, it effectively rules out the sustainability of pegged but adjustable exchange rate regimes, crawling peg
regimes, target rate regimes and other currently popular options.
If even in Mexico inflationary inertia is sufficiently high to translate the active crawling peg
into substantial real exchange rate appreciation, the peg is unlikely to work in other poor countries.
The third essay focuses upon both academic and policy orientations to a "crawling peg
" followed up with situations in which a crawling peg