Devaluation expectations and speculative attacks on the currency
Willman, Alpo (14.04.1987)
Numero
5/1987Julkaisija
Bank of Finland
1987
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-202107221341Tiivistelmä
There is general agreement that a regime of fixed exchange rates can be sustained only if domestic economic policy is consistent with it. An excessively expansive monetary policy, for instance, leads to the depletion of foreign reserves, eventually forcing the central bank to either devalue the currency or allow it to float. However, speculative attacks on the currency have typically been preceded by a change in the foreign exchange target.