The general presumption then is that as countries become more developed, they should be moving away from intermediate regimes, towards greater flexibility of the exchange rate – or in some cases towards a hard peg. IV. Exchange rate surveillance and advice  To return now to the new Decision on Bilateral Surveillance, the quotes with which this paper opens raise two questions.
First, there seems to be a tension between the focus on an unsustainable balance of payments position, and that on exchange rate manipulation, which relates to an undervalued exchange rate.