Exchange Rate Regimes In Middle East And North Africa Mena

This paper reviews the exchange regimes of five emerging market countries in the Middle East and North Africa region-Egypt, Jordan, Lebanon, Morocco, and Tunisia-and one oil-exporting country-Iran-to see whether they need to consider adopting more flexible arrangements as they further open their economies to trade and capital flows.

This dissertation consists of introductory chapter and an additional three papers. There are three common aspects in these three papers. First, the main topic of each paper is the nominal exchange rate regime. Second, the entire three papers use a Markov Switching Regime model as the empirical approach of the analysis. Third, the region covered by the study is Middle East and North Africa (MENA). The first paper is entitled "Identifying De Facto Exchange Rate Regimes: An Alternative Markov Switching Approach." In this paper, a new alternative methodology is applied to classify de facto exchange regimes. The proposed approach is based on a Markov Switching Model (MSM). The paper introduces current methodologies available and their cons and pros. The proposed MSM provides several advantages over existing methodologies and gives additional insightful information for policy makers. The second paper is entitled "Exchange Rate Misalignment Across De Facto Exchange Rate Regimes: A Markov Switching Model Analysis." In this paper, I estimate equilibrium exchange rates for 8 selected countries of MENA region using a panel cointegration technique. The difference between equilibrium and actual exchange rates is identified as exchange rate misalignment. Misalignment, then, is analyzed with a de facto exchange rate regime index using a Markov Switching Model. The main objective of this paper is to determine empirically, which regime is associated with lower misalignment. This result is of interest to policy maker so as to avoid currency crises. The third paper is entitled "Excess Returns Across Exchange Rate Regimes: A Markov Switching Model Analysis." In this paper, a MSM is used to analyze the excess returns over what uncovered interest rate parity predicts for four MENA countries: Egypt, Jordan, Morocco and Tunisia. The main purpose of this paper is to examine the effects of liberalization - signified by applying more flexible exchange rate regimes - on the degree of integration into international financial markets measured as the magnitude of the excess return over what uncovered interest rate parity predicts.

Monetary policy in the Middle East and North African (MENA) countries remains an understudied area; this book fills an important gap by examining monetary policy frameworks and monetary policy strategies in the region. Building on the editors’ earlier book, Monetary Policy and Central Banking in the Middle East and North Africa, which focused on central bank independence issues and on exchange rate regimes, this book emphasises monetary policy strategies. Part I contains an overview of the financial markets and institutions which condition the choice of monetary policy strategy in the countries of the region, followed by single-country studies on aspects of the monetary policy frameworks of Lebanon, Egypt, Jordan, the Palestinian Territory and Turkey. Part II includes analyses of the prospects for inflation targeting in Egypt, Morocco and Tunisia, of the monetary transmission mechanism in the Gulf Cooperation Council countries, of the relative advantages of inflation targeting and exchange rate fixity with reference to Egypt, of the problem of fiscal dominance in Egypt, and of the inflationary implications of exchange rate fixity for Saudi Arabia and Kuwait. The contributors are experts from universities inside and outside the MENA region, from central banks in the region and from outside institutions such as the European Central Bank and the International Monetary Fund.

This book examines monetary policy, central banking and exchange rate regimes in the Middle East and North Africa. Part I covers central banking and monetary policy, while Part II covers monetary policy and exchange rate regimes. Some chapters focus on the monetary frameworks of particular countries, including Lebanon, Algeria, Syria, Tunisia, Morocco, and Turkey, outlining the different systems operated in each case, considering their successes and failures, and discussing important issues such as government policy, macroeconomic performance, inflation and inflation targeting, central bank independence and the impact of broader political economic developments on the conduct of monetary policy. Other chapters cover thematic issues across the whole region, including: central bank independence, operations of debtor central banks, the effect of exchange rates on inflation, and the effect on countries’ trade of alternative exchange rate regimes. Drawing on the insights of scholars and policy-makers, this book is a vital resource for anyone wanting to understand the economies of the Middle East and North Africa.

The world's attention to the countries of the Middle East and North Africa (MENA) region has often been dominated by headline issues: conflict, sanctions, political turmoil, and rising oil prices. Little of this international attention has considered the broad range of development challenges facing this diverse group of countries. Breaking the Barriers reflects the collected thinking of the World Bank's Office of the Chief Economist for the MENA Region on the long-term development challenges facing the region and the reform priorities and strategies for effectively meeting these challenges. It.

This paper documents the main themes covered in two seminars (December 2011 and September 2012) on monetary policy and implementation at the IMF—Middle East Center for Economics and Finance, and includes country case studies. Against the backdrop of the global financial crisis and swings in cross-border capital flows, operational frameworks have become more flexible, and liquidity management has impacted the relationship between the policy rate corridor and market rates. The balance sheet structure of central banks in the Middle East and North Africa (MENA) shows differences between oil exporters and others, while a few countries have exhibited notable changes since early 2011. Collateral now has a significant financial stability function. Although only one MENA country is part of the G20, implementation of the Basel III bank capital adequacy and liquidity rules will most likely impact banks’ way of doing business in MENA countries, even if indirectly.

Monetary Policy and Exchange Rate Regimes: Options for the Middle East examines some of the most pressing issues facing policymakers today. The authors offer answers to such questions as: Are the choices of exchange rate regime limited to hard fixing or fully floating? Are capital flight and banking crises avoidable? What is the best way to coordinate monetary and fiscal policies? The answers to these questions draw on the vast literature available on these topics as well as the lessons learned from recent crises, especially in East Asia and Latin America. Beside its broad coverage, this volume includes rich analyses on specific countries of the Middle East. It merits a wide readership, but policymakers seeking to achieve macroeconomic stability and growth will find it particularly useful.

In this paper, we investigate how economic, political and institutional factors affect the choice of exchange rate regimes, using data on eight MENA (Middle East and North Africa) countries over the 1984-2016 period. Specifically, we run random-effects ordered probit regressions of the likelihood of exchange rate regimes on potential determinants of exchange rate regimes. Three important findings emerge from the analysis. i) Political and institutional factors play an important role in determining the exchange rate regime in MENA countries: a democratic political regime and a low level of corruption increases the probability to opt for a fixed regime. While, strong governments, political stability such as less internal conflicts and more government stability, more law and order enforcement and left-wing Government decreases the probability to opt for a fixed regime. ii) Bureaucracy, independent central banks, elections, terms of trade as well as the monetary independence have no effect on the choice of exchange rate regimes. iii) Financial development is not a robust determinant of the choice of exchange rate regimes. Our results still hold when considering alternative specifications and have important implications for policy makers in MENA countries.

Currency convertibility is a far-reaching instrument to facilitate integration into the global economy. With it a country can gain the benefits of increased freedom in capital movements and of fostering trade and financial linkages worldwide. A seminar sponsored by the Arab Monetary Fund and the IMF, held in Marrakesh, Morocco, discussed the theoretical and empirical aspects of currency convertibility in the Arab countries. The volume, edited by Manuel Guitián and Saleh M. Nsouli, reproduces the papers presented at the seminar.