Impact of remittances into exchange rate and coefficient of dollarization (in case of Kyrgyz Republic)
World experience in the studies of monetary transmission mechanism suggests that in case of transitional economy channels of exchange rate become really important and the transferable money of the migrants affects exchange rate. For the Kyrgyz economy, which bears the open nature, this channel is of great importance. Remittances through the exchange rate may affect the prices of exports and imports, as well as domestic prices and wages. The National Bank of the Kyrgyz Republic with the help of the foreign exchange market, more precisely, with the swap transactions affects the exchange rate. Foreign exchange intervention, buying and selling foreign currency allow the bank to reflect the impact of monetary policy and monetary policy on aggregate demand and production using the exchange rate channel. Our analysis shows that in the Kyrgyz Republic increasing remittances reduce the level of dollarization in the country, as the inflow of remittances (mainly in dollars) leads to depreciation of the dollar, which in turn causes a decrease in the price of imported goods. The National Bank of the Kyrgyz Republic has the ability to affect the dynamics of the national currency through the exchange channel of the transmission mechanism, and the use of instruments of intervention by the bank depends on the change in foreign exchange rates. In its turn, transferable money affects the exchange rate. However, the exchange rate is the cause of rising inflation in the country. Thus, the flow of remittances can be considered efficient in economic development.