This paper explores the composition of international reserves under a central bank’s exchange rate policy target. The model allows for numerical estimation of the shadow price – interpreted as the central bank’s sacrifice of policy precision given additional unit of portfolio variance or...

Starting in 2004 the Guyanese foreign exchange rate has been remarkably stable relative to earlier periods. This paper explores the reasons for the stability of the rate. First, the degree of concentration in the foreign exchange market has increased, thus making the task of moral suasion...