THE PERFORMANCE OF EXCHANGE RATE REGIMES IN THREE SADC COUNTRIES: AN OVERVIEW

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Bernard N. Iyke, Nicholas M. Odhiambo

DOI:10.22495/jgr_v3_i3_p1

Abstract

This paper provides an overview of the real exchange rate and economic growth dynamics in three low-income Southern African countries, namely: the Democratic Republic of Congo (DRC), Malawi and Mozambique. Specifically, the paper investigates the nature of exchange rate regimes and the impact that they have on economic growth, as well as the movement of real exchange rates and real GDP from 1970—2010 in these countries. The paper identifies the following trends: Fixed exchange regimes were pursued from the 1960s until the late 1980s and early 1990s in these countries, which were growth-repressing; the countries pursued floating and managed-floating regimes from the 1990s to date, resulting in moderate-to-rapid economic growth. We conclude that liberalised exchange rates, which lead to undervalued currencies in these Southern African countries, were growth-enhancing.

Keywords: Southern Africa, Economic Growth, Low Income, and Real Exchange Rate

How to cite this paper: Iyke, B. N., & Odhiambo, N. M. (2014). The performance of exchange rate regimes in three SADC countries: An overview. Journal of Governance and Regulation, 3(3), 7-15. http://doi.org/10.22495/jgr_v3_i3_p1