This article LTG Goldrolk to share with you what the exchange rate target area is ~
The exchange rate target area is coordinated and stipulates the amplitude or area of the exchange rate fluctuation between the main reserve currency .The exchange rate fluctuations exceeded this extent, and the relevant countries took corresponding measures to intervene in the foreign exchange market, so that the exchange rate floated in the target area.The exchange rate target area must accurately reflect the actual equilibrium exchange rate, while other currencies are nailed to the target area or float with the target area to form a cheap network system.
The exchange rate target area system includes: the size of the target area, the frequency of changes in the target area, the degree of distribution of the target area, and maintaining the promise of the exchange rate in the target area.The implementation of the exchange rate target area can increase the importance of exchange rate policies, promote the coordination of economic policies of major industrial countries, and play a correct guidance role in market expectations. It can also adjust the amplitude of the target area to reflect the changes in the actual equilibrium exchange rate and avoid large -scale international international internationalForex speculation.However, it is difficult to accurately reflect the balanced exchange rate, and it is difficult to be consistent with the inflation of the two countries and the difference between the trade revenue and expenditure; the target area is generally wide, frequent changes, and it is difficult to stabilize the exchange rate and guide the market expectations;Monetary policies in various countries must maintain exchange rates, which will affect the effect of monetary policy on the domestic economy, and it is difficult to make countries achieve consistency through negotiation.
The meaning of the exchange rate target area can be defined from the two aspects: broad and narrow.The general exchange rate target area refers to the exchange rate system that defines the fluctuation of the exchange rate in a certain area (for example, to limit the fluctuation of the exchange rate to 10%of the upper and lower up and down of the central exchange rate ).The narrow exchange rate target area refers to the core of American scholar Williamson in the early 1980s to limit the range of exchange rate fluctuations, including the determination method of the central exchange rate, the domestic policy matching of the target area, the implementation of the exchange rate target areaInternational policy coordination programs including international policy coordination.The "exchange rate target area" is a management exchange rate system arrangement, that is, a country allows its exchange rate to fluctuate within a specific interval. Once the fluctuation of the exchange rate exceeds this range, the monetary authorities (that is, the central bank) will intervene.
