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Middle East and Central Asia > Kyrgyz Republic

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Cover IMF Working Papers
Unveiling the Effects of Foreign Exchange Interventions: Evidence from the Kyrgyz Republic
Mr. Tigran Poghosyan
This paper analyzes determinants and consequences of FX interventions in the Kyrgyz Republic. Most of the literature on the topic focuses on advanced and emerging economies and this paper provides new evidence from a low-income country. We find that FX interventions take place in response to movements in the exchange rate and its volatility. There is also evidence of “leaning against the wind”, which is more pronounced for relatively larger FX sales and purchases. The “leaning against the wind” is asymmetric toward FX sales and largely reflects leaning against depreciation of domestic currency. We document a varying degree of de-facto exchange rate stability despite the de-jure floating exchange rate regime. During most of the sample, the exchange rate management index was relatively low in line with the floating exchange rate regime, with the exception of the period from 2018 Q4 until the COVID-19 shock, during which the exchange rate management index was relatively high.
Keywords:
foreign exchange interventions; Kyrgyz Republic; WP; FX intervention; FX sale; management index; FX purchase; exchange rate change; exchange rates; Exchange rate adjustments; Currency markets; Exchange rate indexes; Central Asia and the Caucasus
Cover IMF Working Papers
A Markov-Switching Approach to Measuring Exchange Market Pressure
Mr. Francis Y Kumah
This paper characterizes exchange market pressure as a nonlinear Markov-switching phenomenon, and examines its dynamics in response to money growth and inflation over three regimes. The empirical results identify episodes of exchange market pressure in the Kyrgyz Republic and confirm the statistical superiority of the nonlinear regime-switching model over a linear VAR version in understanding exchange market pressure. The nonlinear empirical approach adequately characterizes the data generation process and yields results that are consistent with theoretical predictions, particularly the dampening effect of monetary contraction on depreciation pressure. During periods of appreciation pressure, however, the reverse policy option-monetary expansion-may not be efficient, particularly where PPP rather than UIP drives exchange rates. In addition, monetary expansion in such cases defeats the primary objective of monetary policy-price stability-and may exacerbate the instability.
Keywords:
WP; financial crisis; foreign exchange market; interest rate
Cover Macroeconomic Developments in the Baltics, Russia, and Other Countries of the Former Soviet Union, 1992-97
Macroeconomic Developments in the Baltics, Russia, and Other Countries of the Former Soviet Union, 1992-97
Mr. Luis Valdivieso

Abstract

This paper discusses the significant overall progress with macro stabilization of these transition countries during 1992-1997. While average inflation declined steadily since 1992, output fell significantly for many of these countries during this period, and it was not unti 1996-97 that as a group they experienced positive growth, financial policies, the current account, competitiveness, debt-and non-debt-creating capital flows, and the initial impact of the Asian crisis.

Keywords:
OP; reformer; deficit; SBA III; exchange market pressure; intermediate reformer; IMF staff estimate; IMF support; adjustment program; treasury bill market; Real exchange rates; Currency markets; Debt burden; International capital markets; Baltics
Cover Central Bank Reforms in the Baltics, Russia, and the Other Countries of the Former Soviet Union
Central Bank Reforms in the Baltics, Russia, and the Other Countries of the Former Soviet Union
Mr. Malcolm D. Knight

Abstract

Since 1991, the 15 countries under review - have to varying degrees, been pursuing reforms whose broad objectives have been to achieve market-based determination of interest rates and exchange rates, manage banking system liquidity through market operations with indirect instruments, and provide the institutional underpinnings for the design and implementation of macroeconomic stabilization and structural reform programs supported by the IMF. This study reviews the experience under these programs and the economic developments in the countries that undertook them.

Keywords:
OP; central bank; country; accounting reform; bank; internal audit reform issue; reform issue; country ranking; bank governance; restructuring policy; Commercial banks; Treasury bills and bonds; Credit; Currencies; Baltics; Payment systems; Currency markets; Bank supervision; Bank resolution