IMF paper finds inflexible exchange rate regimes most exposed to hot money

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Exchange rate flexibility is a useful instrument in protecting countries from the effects of capital inflows on domestic credit, according to an International Monetary Fund paper, published on February 3.

Nicolas Magud, Carmen Reinhart and Esteban Vesperoni, the paper's authors, analyse the impact of exchange rate flexibility on credit markets during periods of large capital inflows in emerging markets. The authors note that the prospects of expansionary monetary policies in the advanced

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