Introduction Inflation Targeting is the public announcement of numerical targets for inflation for the year. This has become part of some governments in the emerging economies. They are usually made during budgets or before after budgets in a form of economic plans. In words of Mishkin (2004) inflation targeting is much more than the public announcements. He has listed five elements of inflation targeting which include:  1. The public announcement of short term and medium-term numerical targets for inflation  2. An institutional commitment to price stability as the primary goal of monetary policy, to which other goals can be subordinated.  3. An information inclusive strategy in which many variables, and not just monetary aggregates or the exchange rate, are used for deciding the setting of policy instruments;  4. Increased transparency of the monetary policy strategy through communication with the public and the market about the plans, objectives, and decisions of the monetary authorities and  5. Increased accountability of the central bank for attaining its inflation objectives. Emerging economies use inflation targeting to avoid fluctuations. There are a number of reasons why emerging market economies according to Ades A., Buscaglia M. and Masih R (2002) (1) as lack of credibility (Calvo and Reinhart, 2002), (2) a high pass-through coefficient (Goldfajn and Werlang, 2000), (3) the existence of large foreign currency debt, and a high degree of dollarization. Some emerging market countries that engage in inflation targeting have gone too far in the limitation of exchange rate flexibility, with the risk of transforming the nominal exchange rate in the nominal anchor in the eyes of the public argues Mishkin (2004). He suggests that one possible way to avoid this problem is for central banks in emerging market countries to adopt a transparent policy of smoothing short-run exchange rate fluctuations, while making it clear that they will allow exchange rates to reach their long run level commented Ades A., Buscaglia M. and Masih R (2002). How does emerging economies differ from developed economies in inflation targeting ? Calvo and Mishkin, (2003) outlined essential institutional differences between emerging market countries and developed market economies that must be taken into account to derive sound theory and policy advice. They highlighted them as follows:   * Weak fiscal institutions.   * Weak financial institutions including government prudential regulation and supervision.   * Low credibility of monetary institutions.   * Currency substitution and liability dollarization.   * Vulnerability to sudden stops of capital inflows. In his Mishkin (2004) argued that developed economies are no exception or immune to problems with their fiscal, financial and monetary institutions. He stated that, Weak fiscal institutions, weak financial institutions including government prudential regulation and supervision and low credibility of monetary institutions will be experience but there is dissimilarity in the degree of the problem in emerging market economies. Fragile institutions in emerging market countries make them very vulnerable to high inflation and may lead to currency crisis. When there is curren