Question

Topic: exchange rate regime in developing countries (Russia and Kazakhstan)

How selected countries Exchange Rate Regimes are changing before 2020?

Answer 1

Kazakhstan exchange rate regime is a floating exchange rate system. Kazakhstan's central bank opts for the devaluation of the currency from time to time. Since 1999, Tenge has been devalued three times. The country maintains it in accordance with the stability of the Russian Rouble's stability. National bank intervenes when there is a threat to price, and, financial stability. In 2015, Tenge, was trading in the 170-198 range. A fall in oil prices results in the currency sinking. To prevent the fall of Tenge, state owned firms can be asked to sell foreign currency revenue.

In 2020, countries have stuck to the floating regime system owing to the Covid Pandemic resulting in a fall. Countries cannot manage such a decline in currency.

Russia

Russia has a managed floating exchange rate system. The movement in the Russian currency Rouble has been market driven. Bank of Russia, in 2004, adopted less restrictive capital control regulations. The movement was towards flow controls coming from an authorization based system. In 2005, Russia also introduced a dual currency indicator. Flexibility was increased gradually for a fully floating exchange rate system.