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Determination of Exchange Rate Regimes in an unstable economy

Elona Fejzaj

Choosing a suitable exchange rate regime has not always represented an easy step to take. An appropriate regime affects the impact that this regime will have on the design of monetary policy in a given state, in level of transactions and their costs thereby affecting the balance of payments and providing an important financial impact .Throughout the review of existing literature, gaps that it can represent and taking into account the constraints that may be also presented, this article aims to introduce a clear picture of the current problems and find ways to improve them. In terms of an unstable economy, it is necessary to analyze the exchange rates, the volatility of their ongoing and their impact on key macroeconomic indicators. Fluctuations in exchange rates can often incite the economy and financial analysts or policy makers, to review monetary policy, fiscal and macroeconomic risks.