66 Int. J. Economic Policy in Emerging Economies, Vol. 5, No. 1, 2012 Copyright © 2012 Inderscience Enterprises Ltd. A monetary analysis of foreign exchange market disequilibrium in Fiji Shabbir Ahmad* University of Nizwa, P.O. Box 33, 11G-6, CEMIS, Postal Code 616, Birkat-al-Mauz, Sultanate of Oman E-mail: shabbir@unizwa.edu.om *Corresponding author Abul Shamsuddin Newcastle Business School, University of Newcastle, Callaghan NSW 2308, Australia Fax: +61 2 4921 7398 E-mail: Abul.Shamsuddin@newcastle.edu.au Malcolm Treadgold School of Business, Economics and Public Policy, University of New England, Armidale, NSW 2351, Australia Fax: +61 2 6773 3596 E-mail: mtreadgo@une.edu.au Website: http://www.une.edu.au/staff/mtreadgo.php Abstract: This paper evaluates a monetary model of foreign exchange market pressure in Fiji using the autoregressive distributed lag bounds testing methodology. The results suggest that if the monetary authorities in Fiji fix the exchange rate, they lose the ability to implement an independent monetary policy through control of central bank credit. Stronger monetary control is regained to the extent that pressure in the foreign exchange market is relieved through exchange rate movements rather than reserve movements. Keywords: EMP; exchange market pressure; Fiji; monetary policy; ARDL; autoregressive distributed lag; error correction; bounds testing. Reference to this paper should be made as follows: Ahmad, S., Shamsuddin, A. and Treadgold, M. (2012) ‘A monetary analysis of foreign exchange market disequilibrium in Fiji’, Int. J. Economic Policy in Emerging Economies, Vol. 5, No. 1, pp.66–81. Biographical notes: Shabbir Ahmad is an Assistant Professor and Head Economics section at the School of Economics, CEMIS, University of Nizwa, Oman. Before joining University of Nizwa, he has worked at IIIE, International Islamic University, Islamabad, Pakistan. He received his PhD from University of New England, NSW, Australia in 2003. His research interests are in the area