01921cas a2200241 a 4500 AALejournalIMF021487 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513568638 1018-5941 BD-DhAAL BD-DhAAL Gray, Simon. Recognizing Reality-Unification of Official and Parallel Market Exchange Rates / Simon Gray. Washington, D.C. : International Monetary Fund, 2021. 1 online resource (45 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Some central banks have maintained overvalued official exchange rates, while unable to ensure that supply of foreign exchange meets legitimate demand for current account transactions at that price. A parallel exchange rate market develops, in such circumstances; and when the spread between the official and parallel rates is both substantial and sustained, price levels in the economy typically reflect the parallel market exchange rate. 'Recognizing reality' by allowing economic agents to use a market clearing rate benefits economic activity without necessarily leading to more inflation. But a unified, market-clearing exchange rate will not stabilize without a supportive fiscal and monetary context. A number of country case studies are included; my thanks to Jie Ren for pulling together all the data for the country case studies, and the production of the charts. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2021/025 Full text available on IMF http://elibrary.imf.org/view/journals/001/2021/025/001.2021.issue-025-en.xml IMF e-Library