Matakuliah
Tahun
: Keuangan Internasional
: 2009
Exchange Rate Systems
Pertemuan 5
Soal 1
• (Question 7)
What is the effect of a foreign exchange
intervention on the money supply ? How can a
central bank offset this effect and still hope to
influence the exchange rate ?
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Jawaban Soal 1
When a central bank buys (sells) foreign currency, its international
reserves increase (decrease), and the money supply increases
(decreases) simultaneously. To offset the effect on the money
supply, the foreign exchange intervention can be sterilized; that is,
the central bank can perform an open market operation that
counteracts the effect on the money supply of the original foreign
exchange intervention. The direct effects of a sterilized
intervention are two-fold. First, it forces a portfolio shift on private
investors, by replacing foreign bonds with domestic bonds (or
vice versa). This may affect expectations and prices. Second, the
actions in the foreign exchange markets, while very small relative
to the nominal trading volumes, may still manage to squeeze
foreign exchange inventories at dealer banks and generate pricing
effects. Indirectly, the central bank can signal its opinion on the
fundamental value of the exchange rate through an intervention
that consequently affects market expectations. There is no
consensus on how effective sterilized interventions are in
affecting the level and volatility of exchange rates.
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Soal 2
• (Problem 1)
Toward the end of 1999, the central bank (Reserve Bank)
in Zimbabwe stabilized the Zimbabwe dollar, the Zim
for short, at Z$ 38/USD and privately instructed the
banks to maintain that rate. In response, at the end of
1999, an illegal market developed wherein the Zim
traded at Z$ 44/USD. Are you sure surprised at rumors
that claim corporation in Zimbabwe were “hoarding”
USD 200 million ?. Explain.
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Jawaban Soal 2
The existence of an illegal exchange market indicates that the Zim
is incorrectly valued at Z$38/USD. Clearly, the Zim is over-valued at
the official rate (See Exhibit 5.10 for an example of such a situation).
At this “artificial” exchange rate everybody wants to turn in Zim to
the central bank, receive foreign currency and invest them abroad.
To maintain the overvalued rate without losing all its international
reserves, the government must control the use of foreign exchange
(impose exchange controls). It likely forces exporters to convert
their foreign exchange at the official rate, which is too low. Given
this situation, hoarding foreign exchange is a rational response.
Anyone who earns foreign exchange has an incentive to hold on to
the foreign exchange until the Zim is valued correctly, i.e. when it is
devalued. Moreover, given high inflation in Zimbabwe and a highly
unstable political regime, dollars are a better store of value than
Zimbabwe dollars. As is well known, the current situation in
Zimbabwe is much worse than it was in 1999.
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Soal 3
• Home Work
Soal 3, merupakan tugas perorangan yaitu setiap
mahasiswa diwajibkan untuk menjawab pertanyaan
(Question dan Problem) yang ada disetiap akhir bagian
masing-masing chapter.
Tugas ini dikumpulkan sebelum perkuliahan pertemuan
berikutnya dimulai.
Mahasiswa menjawab Question 11, 15 dan Problem 3
yang ada di halaman 175 - 176
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