Monetary Policy and Exchange Market Pressure Dynamics in Sub-Saharan Africa

The hypothesis that a tighter monetary policy stance can lend strength to currency was tested in this study using Generalized Methods of Moments (GMM) estimation in a dynamic panel setting. Data on 20 SSA economies for which data were available for the period 1998 to 2017 are used. The study found a negative and significant relationship between monetary policy and exchange market pressure (EMP), implying that contractionary monetary policy can ease EMP. It also revealed significant relations between aggregate output, levels of public debt, the current account balance and terms of trade and exchange market pressure (EMP)