In a nutshell, South Africa has a relatively hands-off approach to managing capital inflows while monetary policy is not focused on the exchange rate but rather on the possible inflationary implications of exchange rate changes. However, during periods of sustained inflows, the authorities accumulated foreign exchange reserves, without in any way seeking to influence the exchange rate towards a particular level or range.
The Central Bank of Ireland introduced caps on loan-to-value (LTV) and loan-to-income (LTI) ratios in early 2015. Both the introduction of the measures and the first review in 2016, threw up some interesting challenges, some of which I would like to share with you today.