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Managing Foreign Exchange Rate Risk: Capacity Development for Public Debt Managers in Emerging Market and Low-Income Countries
Author:
Thordur Jonasson https://isni.org/isni/0000000404811396 International Monetary Fund

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Sheheryar Malik https://isni.org/isni/0000000404811396 International Monetary Fund

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,
Kay Chung https://isni.org/isni/0000000404811396 International Monetary Fund

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Michael G. Papaioannou
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Series:
IMF Working Papers
Volume/Issue:
Volume 2024: Issue 167
Language:
English
Publication Date:
02 Aug 2024
DOI:
https://doi.org/10.5089/9798400287107.001
ISBN:
9798400287107
ISSN:
1018-5941
Pages:
32
Keywords:
exchange rate risk risk management; debt portfolio; public debt manager; currency exposure; risk-management strategy; Government debt management; Debt management; Currencies; Exchange rate risk; Foreign currency debt; Asia and Pacific; Sub-Saharan Africa; Middle East; North Africa; Central Asia; Africa
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper presents some sound practices for foreign-currency risk management in developing countries and outlines instruments for managing sovereign debt portfolio currency exposures. Adoption of a debt management strategy with well-defined targets for foreign exchange risk is a critical element of public debt risk management. To this end, public debt managers often need to face with complex strategic and operational matters related to public debt hedging practices, including the use of derivatives. In this context, we highlight the main institutional challenges in the management of foreign exchange risk in sovereign debt portfolios and discuss the overall implementation of a foreign exchange risk-management strategy.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund