The rise in food and fuel prices coupled with the impact of currency depreciations have been important sources of inflationary pressures in many countries. The current uncertainties in the global financial  BIS central bankers’ speeches  5  environment and their associated impact on currencies may continue to pose a major threat to inflation outcomes in many countries.
Recently the issue of currency movements and its impact on competitiveness has received much attention in the general press as well as in policy and academic circles. While it may be difficult to determine the equilibrium exchange rate, it is well recognised that a significantly misaligned exchange rate or excessively volatile exchange rate leads to a misallocation of resources which eventually thwarts sustainable growth.