The 2010-2019 period was marked by a steady depreciation of the Tunisian Dinar (TND) against the two major international currencies: a depreciation rate of 95% against the United States Dollar (USD) and 63% against the euro (EUR). To examine whether this depreciation is caused by a discrete manipulation of the de facto exchange regime and exchange rate or a natural result of the supply and demand fundamentals under a floating regime, this study applies the State-Space Model technique to daily data because it serves to check whether the weights are time-varying or stagnant. The results show that the steady depreciation of the TND cannot be exclusively attributed to market forces. The de facto regime is crawl-like with implicit time-varying weights that have opposite trends, except in 2017. The TND is implicitly anchored to the two major currencies and the monetary authorities intervene to modulate and moderate its fluctuation. These findings may be important to anticipate the future exchange rate trend; develop an effective hedging strategy; or examine the effect of external shocks and economic fundamentals changes on the exchange rate evolution.

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Keywords

Exchange Rate, de Facto Regime, State Space Model, Depreciation, Fear of Floating