International Conference on Eurasian Economies
10-12 July 2017 – Istanbul, TURKEY
Paper detail
Paper ID : 1836
Status : Paper published
Language : Turkish
Topic : Macroeconomics
Presenter: Asst. Prof. Dr. Junus Ganiev
Session : 3B Finans I
The Relationship between Exchange Rate, Official Reserves and Money Supply in Kyrgyzstan
Kırgızistan’da Döviz Kuru, Resmi Rezervler ve Para Arzı Arasındaki İlişki
- Asst. Prof. Dr. Junus Ganiev (Kyrgyz-Turkish Manas University, Kyrgyzstan)
- Asst. Prof. Dr. Damira Baigonushova (Kyrgyz-Turkish Manas University, Kyrgyzstan)
- Assoc. Prof. Dr. Nevin Aydın (Artvin Çoruh University, Türkiye)
Abstract
In recent years, there has been considerable instability in the exchange rates of many countries. This can directly affect macroeconomic stability on one side and monetary policy or rather money supply on the other. Because central banks are making interventions to the foreign exchange market by buying and selling foreign exchange in order to provide stability of exchange rate. As a result, both the official reserves and the money supply are constantly changing. Since Kyrgyzstan is a country dependent on imports in most commodities, the Central Bank of the Kyrgyz Republic sees the exchange rates’ stability as an important instrument of price stabilizing. However, such a policy may deteriorate the stability of the total money supply and adversely affect the economy. Therefore, in this study, it is aimed to examine the relations between exchange rate, money supply and official reserves by using 2002-2016 monthly data and cointegration method. Empirical results have shown that a change in the exchange rate causes opposite changes in both the reserves and the money supply as a result of the central bank’s interventions. However, more concrete recommendations on the effectiveness of monetary policy in Kyrgyzstan are required to make more detailed analysis.
JEL codes: F31, E52, E58
Ganiev, Junus, Baigonushova, Damira, Aydın, Nevin (2017). "The Relationship between Exchange Rate, Official Reserves and Money Supply in Kyrgyzstan" in Proceedings of International Conference of Eurasian Economies 2017, pp.231-236, Istanbul, TURKEY.
DOI: https://doi.org/10.36880/C08.01836
