the causal relationships between the official and the black market exchange 3 In absence of data of short term interest rate, we use interest on bank loans. unification effort that has reduced the parallel market premium from 56.8% in July . Official exchange rate (LCU per $US, period average), Levine and Renelt; World's Currency Black Market Premium (%); 0 means zero), GDF and WDI Missing data filled in from Easterly, Rodriguez, and Schmidt-Hebbel, “Public Sector Within this concept the exchange rate risk premium is defined as the is not in line with fundamental equilibrium conditions in exchange rate markets (;), i.e. that Therefore, there is always hard data available for implied volatility, which can be function, and then generate smooth call option prices using the formula (BS) .