The interconnectedness of inflation and exchange rates poses one of the most significant and persistent challenges for policymakers and financial professionals worldwide. A country's currency value is a direct reflection of its economic health, and when it fluctuates wildly, it can create a ripple effect, fueling inflation by making imports more expensive, reducing the purchasing power of citizens, and deterring foreign investment. This intricate relationship requires a sophisticated and proactive approach to policy, combining robust monetary tools with a deep understanding of market dynamics to maintain stability and foster sustainable economic growth.

This program provides a comprehensive and practical guide to the complex art and science of managing both inflation and exchange rate volatility simultaneously. Participants will gain a fundamental understanding of the theoretical links between these two variables and the operational challenges of managing them in the real world. The course will address the trade-offs inherent in different policy regimes, from fixed pegs to managed floats, and will explore the tactical use of foreign exchange interventions, capital controls, and market communication. By focusing on real-world case studies and the latest research, attendees will be equipped to develop and implement effective strategies that navigate the turbulent waters of global financial markets.

Duration: 10 days

Target Audience:

• Central Bank Officials
• Financial Regulators and Supervisors
• Government Economists and Policy Analysts
• Foreign Exchange (FX) Traders and Strategists
• Risk Management Professionals
• Academics and Researchers
• Economists in International Institutions
• Corporate Treasurers and Finance Managers
• Graduate Students in Economics and Finance
• Journalists and Economic Reporters

Objectives:

• Master the core theoretical links between inflation and exchange rates.
• Learn to identify the key drivers of exchange rate volatility.
• Understand the channels through which exchange rate movements affect inflation.
• Grasp the complexities of the policy trilemma.
• Develop proficiency in the use of foreign exchange interventions.
• Explore best practices for communicating monetary policy decisions.
• Learn about robust methods for modeling exchange rate dynamics.
• Identify the critical legal and governance frameworks for capital controls.
• Develop skills in assessing and managing currency risk.
• Formulate strategies for building a resilient macroeconomic framework.

Course Modules:

Module 1: The Core Relationship

• The Purchasing Power Parity (PPP) theory
• The role of relative inflation rates
• The impact on a country's exports and imports
• The link to interest rates and capital flows
• The concept of the real effective exchange rate (REER)

Module 2: Exchange Rate Regimes

• The spectrum from fixed to floating
• The benefits and drawbacks of each regime
• The concept of a managed float or "fear of floating"
• Case studies of countries with different regimes
• The policy trilemma and its implications

Module 3: Monetary Policy Tools

• The use of the policy interest rate
• The role of a "clear and focused research question"
• The impact on currency values and inflation
• The challenges of unconventional monetary policies
• The importance of a "risk and mitigation" plan

Module 4: Foreign Exchange Intervention

• The different types of interventions (e.g., sterilized, non-sterilized)
• The effectiveness of interventions in different market conditions
• The role of a simple scorecard and a dashboard
• The use of foreign reserves and swap lines
• The importance of a "data story map"

Module 5: The Pass-Through Effect

• The concept of exchange rate pass-through to inflation
• The factors that influence the degree of pass-through
• The importance of a "clear and consistent reporting style"
• The difference between advanced and developing economies
• The role of a program's theory of change

Module 6: Capital Controls and Macroprudential Tools

• The definition and purpose of capital controls
• The use of a "stakeholder analysis"
• The challenges of implementing and enforcing them
• The role of a clear and compelling KPI
• The use of macroprudential policies to manage risk

Module 7: Volatility and Risk Management

• Measuring exchange rate and inflation volatility
• The importance of a "risk and mitigation" plan
• The use of value-at-risk (VaR) and stress testing
• The role of a simple scorecard and a dashboard
• The use of hedging instruments and derivatives

Module 8: The Role of Expectations

• The link between exchange rates, inflation, and expectations
• The role of a "data story map"
• The importance of central bank credibility
• The impact of a "clear and consistent reporting style"
• The use of survey data on expectations

Module 9: Crisis Management

• The causes and consequences of currency crises
• The role of a program's theory of change
• The use of IMF programs and international cooperation
• The importance of a "stakeholder analysis"
• The policy response to a sudden capital outflow

Module 10: Fiscal Policy and Its Link

• The impact of fiscal policy on inflation and exchange rates
• The role of a clear and compelling KPI
• The challenge of fiscal dominance
• The importance of fiscal responsibility
• The role of a "clear and focused research question"

Module 11: International Cooperation

• The role of global institutions (e.g., IMF, BIS)
• The importance of a "risk and mitigation" plan
• The challenges of policy coordination
• The use of a simple scorecard and a dashboard
• The role of a "data story map"

Module 12: Case Studies in Management

• Case study: Managing a currency in a high-inflation environment
• Case study: The impact of a global shock on an economy
• Case study: The challenges of a crawling peg regime
• The lessons from past financial crises
• The importance of a "clear and consistent reporting style"

Module 13: Advanced Econometrics

• The use of VAR and VECM models
• The role of a program's theory of change
• Forecasting exchange rates and inflation
• The use of a "stakeholder analysis"
• The role of a clear and compelling KPI

Module 14: The Future of FX Management

• The impact of central bank digital currencies (CBDCs)
• The importance of a "clear and focused research question"
• The role of artificial intelligence and big data
• The future of the monetary policy toolkit
• The role of a "risk and mitigation" plan

Module 15: Political Economy

• The political pressures on central banks
• The use of a simple scorecard and a dashboard
• The importance of central bank independence
• The role of a "data story map"
• The challenges of communicating with a polarized public

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 10 working days before commencement of the training.