Foreign Exchange

A flexible Exchange Rate Regime (1989 – 1993)

 Adoption of Crawling Band Regime (1994 – 1996)

• Economic Crisis in April 1994

• Stabilization Program (April 5, 1994)

• Period between 1996-2000
• Rate of increase in foreign exchange basket was targeted in order to minimize the volatility of the real exchange rate for the years between 1996-1999 .
•  Currency-Peg Regime was determined as the nominal anchor in the stabilization program in 2000.
• • Stand-by Agreement with IMF in 2000
• • Liquidity Crisis in November 2000
• • New Agreement with IMF on December 18, 2000
• • No change on the exchange rate policy.

• Period Starting from 2001
•  Floating exchange rate regime
• • Economic crisis in February 2001.
• • New Stand-by Agreement with IMF on May 28, 2001
• • New Economic Stabilization Program initiated in 2002
• • Implicit Inflation Targeting between 2002 and 2005
• • Limited Central Bank intervention in the foreign exchange market - to prevent excessive volatility
• • Formal Inflation Targeting adopted in 2006
• • Adoption of new regulations to ensure the efficiency in the foreign exchange market and to reinforce foreign exchange liquidity in the banking system in 2008
• • Expansionary monetary policy was abandoned with announcement of the Monetary Policy Exit Strategy on April 14, 2010.
• • In the fourth quarter of 2010, inflation targeting was augmented with an additional financial stability orientation.

• Appreciation is an increase in a property’s value caused by factors like inflation, increasing demand, and improvements to the property.
• Depreciation is a decrease in the value of a property caused by lower demand, deflation in the economy, deterioration, or the influences of other undesirable factors.

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