Exchange rate regimes in selected Transition Economies

Today not many comments, but just some facts about exchange rate regimes in selected transition economies. A more extensive comment should arrive at some point.
Generally, the TEs embarked on a whole variety of routes in terms of exchange rate regimes – from full floats to currency boards. Moreover, as some maintained the same regime since early 1990s, some went through gradual regime changes, and finally others experimented or where forced to abandon regimes. The question on the optimality of the paths, remains open.

Hungary

Figure 1. HUF exchange rates against EUR (blue) and USD (red). Vertical lines indicate dates described below with (*) . Dates: June 1991-April 2006.
- 9 Dec 1991 - peg to basket 50%ECU, 50% USD, C.B. intervention band +/-0.3%;
- 2 Aug 1993 – basket changed to 50%DEM, 50% USD;
- 16 May 1994 - basket changed to 70%ECU, 30% USD;
- 22 Dec 1994 - intervention band widened to +/-2.25%;
- 13 Mar 1995 – (*) crawling peg/band to basket. Bands at +/-2.25%. Crawl rate decreasing;
- 1 Jan 1997 – basket changed to 70%DEM, 30% USD;
- 1 Jan 1999 – basket changed to 70%EUR, 30% USD;
- 1 Jan 2000 – basket changed to 100% EUR;
- 3 May 2001(*) – band widened to +/-15%;
- 1 Oct 2001(*) – fixed horizontal band +/-15%.
Notes: Devaluations in early 1990s. (*) vertical line on graph. Source: Aglietta, Baulant, Moatti
Czech Republic
Figure 2. CZK exchange rates against EUR (blue) and USD (red). Vertical lines indicate dates described below with (*) . Dates: December 1991-April 2006.
- 1 Jan 1991 – fixed peg against basket 65% DEM, 35% USD. C.B. intervention band +/-0.5%;
- 28 Feb 1996(*) – band widened to +/-7.5%;
- 26 Mar 1997(*) – (managed) float;
Note: (*) vertical line on graph. Source: ABM, IMF
Slovakia

Figure 3. SKK exchange rates against EUR (blue) and USD (red). Vertical lines indicate dates described below with (*) . Dates: July 1993-April 2006.
- 1 Jan 1991 – fixed peg against basket 60% DEM, 40% USD, C.B. intervention band +/-1.5%;
- 1 Jan 1996 – band widened to +/-3%;
- 16 Jul 1996 – band widened to +/-5%;
- 1 Jan 1997 – band widened to +/-7%;
- 1 Oct 1998(*) – managed float;
- 25 Nov 2005(*) - ERM II;
Note: (*) vertical line on graph. Source: ABM, IMF
Poland

Figure 4. PLN exchange rates against EUR (blue) and USD (red). Vertical lines indicate dates described below with (*) . Dates: December 1991-April 2006.
- 1 Jan 1990 – fixed to USD;
- 16 May 1991 – fixed to basket (45% USD, 55% DEM+GBP+FF+CHF);
- 14 Oct 1991 – crawling peg to (same) basket. Crawl rate decreasing, C.B. intervention margin +/-0.5%;
- 6 Mar 1995 – C.B. intervention margin widened to +/-2.0%;
- 16 May 1995 – crawling band (to basket) +/-7%. Crawl rate decreasing;
- 26 Feb 1998 – band widened to +/-10%;
- 28 Oct 1998 – band widened to +/-12.5%;
- 1 Jan 1999 – basket changed to 55% EUR, 45% USD;
- 25 Mar 1999 – band widened to +/-15%;
- 12 Apr 2000(*) – free float (but C.B. reserves extraordinary right to intervene)
Notes: Devaluations in early 1990s. (*) vertical line on graph. Source: Kokoszczynski, ABM, NBP

Slovenia Figure 5. SIT exchange rates against EUR (blue) and USD (red). Vertical lines indicate dates described below with (*) . Dates: October 1991-April 2006.
- 8 Oct 1991 – managed float;
- 27 Jun 2004 – ERM II;
Source: IMF, BSI;
Estonia
- 20 Jun 1992 – currency board with DEM (subsequently EUR);
- 27 Jun 2004 – ERM II;
Source: IMF, Eesti Pank;
Latvia
- 20 Jul 1992 – managed float;
- 12 Feb 1994 – fixed peg to SDR basket. C.B. margin +/-1%;
- 1 Jan 2005 – fixed peg to EUR. C.B. margin +/-1%;
- 2 May 2005 – ERM II;
Source: IMF, Bank of Latvia, Eesti Pank, Hansabank;
Lithuania Figure 6. LTL exchange rates against EUR (blue) and USD (red). Vertical lines indicate dates described below with (*) . Dates: July 1993-April 2006.
- 1 Jul 1992 – managed float;
- 1 Apr 1994(*) – currency board with USD;
- 2 Feb 2002(*) – currency board with EUR;
- 27 Jun 2004 – ERM II;
Note: (*) vertical line on graph. Source: Bank of Lithuania, IMF
Romania
- Aug 1992 – managed float, various degree of tightness;
Note: Due to heavy interventions, especially in 2001, IMF classifies Romanian regime as a (de facto) crawling peg/crawling band to USD(2001-Mar 2003) and EUR (3 Mar 2003 - 2 Nov 2004), afterwards the managed float is in place.
Sources: IMF, Kocenda, NBRo, EC.
Bulgaria
- Feb 1991 – managed float;
- 1 Jul 1997 – currency board with DEM (subsequently EUR);
Source: BNB, Kocenda

Others :
Moldova - independent float since early 1990s, managed float since 30 June 2002 (IMF);
Georgia – managed float since early 1990s, 7 Dec 1998 ceased to intervene thus labeled as independent float, due to nature of interventions 1 Jan 2003 again labeled managed float (IMF); Russia – early 1990s managed float, mid 1995 band to USD (initially ca. +/-13%), September 1998 ceased intervention and switched to managed float (IMF);
Ukraine – de facto currency peg to USD since late 1990s (CASE);
Croatia –managed float since early 1990s (IMF);
Albania - generally a float with occasional interventions to reduce volatility since early 1990s (IMF);
Data Source for graphs – DataStream.