Journal Issue
Working Paper Summaries (WP/93/1 - WP/93/54)

Summary of WP/93/13: “Exchange-Rate Unification with Black Market Leakages: Russia 1992”

International Monetary Fund
Published Date:
August 1993
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In 1992 the Russian authorities unified the multiple exchange rates that had applied to international transactions. This paper describes the multiple exchange rate system that existed in Russia before mid-1992 and undertakes a theoretical exploration of the effects of the exchange rate unification measures that were implemented in July 1992. The model developed here takes account of leakages between official and black markets and allows for flexibility of the exchange rates in both official and parallel currency markets. Within this multiple exchange rate system with black market leakages, the paper traces the dynamic effects on the official and parallel foreign exchange markets of changes in the types of policy instruments that were associated with the reform of Russia’s exchange rate regime. These instruments include adjustments in pegged interbank market exchange rates, rates of foreign exchange surrender taxation, and rates of taxation of capital account transactions.

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