Bid-ask spreads in the foreign exchange markets of selected Caribbean countries

Author(s): Seerattan, Dave (2005)

Created 01 Jan, 2005
Categories Working Papers
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At the beginning of the 1990s a number of Caribbean countries sought to liberalise their foreign exchange markets1. This involved the elimination of exchange controls, the removal of restrictions on both the current and capital transactions, the widening of the number of market players in the foreign exchange markets (brokers (inter-dealers), dealers and cambios) and the move from a fixed to a floating exchange rate regime. These developments were precipitated by the severe imbalances that had built up in these economies in the 1980s, especially with respect to the over-valuation of the foreign exchange rate and the huge imbalances between demand and supply in the foreign exchange markets in these jurisdictions.

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