Does Foreign Exchange Intervention Work
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Does Foreign Exchange Intervention Work
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Author : Kathryn M. Dominguez
language : en
Publisher: Peterson Institute for International Economics
Release Date : 1993
Does Foreign Exchange Intervention Work written by Kathryn M. Dominguez and has been published by Peterson Institute for International Economics this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993 with Business & Economics categories.
How much impact on exchange rates do central banks have when they buy and sell currencies? According to many analysts, such intervention has no independent impact. This book challenges the conventional wisdom, demonstrating that such intervention can be an effective and extremely important tool for policymakers. Using previously unavailable daily intervention data from the US Federal Reserve and German Bundesbank, the authors show that even "sterilized" intervention -intervention that entails no corresponding changes in monetary policy- has a significant effect. A key element is whether the intervention is known to the public: widespread market awareness of the activity adds substantially to its payoff. Authors Dominguez and Frankel draw implications for intervention policy and its role in international economic policy coordination.
Official Intervention In The Foreign Exchange Market
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Author : Lucio Sarno
language : en
Publisher:
Release Date : 2001
Official Intervention In The Foreign Exchange Market written by Lucio Sarno and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Foreign exchange categories.
Foreign Exchange Intervention
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Author : Geert J. Almekinders
language : en
Publisher: Edward Elgar Publishing
Release Date : 1995
Foreign Exchange Intervention written by Geert J. Almekinders and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 1995 with Business & Economics categories.
This book explains why central banks continue to carry out foreign exchange interventions despite their poor track record. It uses confidential daily intervention data from the Bundesbank and the Federal Reserve.
Unveiling The Effects Of Foreign Exchange Intervention
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Author : Gustavo Adler
language : en
Publisher: International Monetary Fund
Release Date : 2015-06-23
Unveiling The Effects Of Foreign Exchange Intervention written by Gustavo Adler and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-06-23 with Business & Economics categories.
We study the effect of foreign exchange intervention on the exchange rate relying on an instrumental-variables panel approach. We find robust evidence that intervention affects the level of the exchange rate in an economically meaningful way. A purchase of foreign currency of 1 percentage point of GDP causes a depreciation of the nominal and real exchange rates in the ranges of [1.7-2.0] percent and [1.4-1.7] percent respectively. The effects are found to be quite persistent. The paper also explores possible asymmetric effects, and whether effectiveness depends on the depth of domestic financial markets.
Official Foreign Exchange Intervention
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Author : Mr.Jorge Iván Canales Kriljenko
language : en
Publisher: International Monetary Fund
Release Date : 2006-03-02
Official Foreign Exchange Intervention written by Mr.Jorge Iván Canales Kriljenko and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006-03-02 with Business & Economics categories.
Despite increasing exchange rate flexibility, central banks in emerging markets still intervene in their foreign exchange markets for several reasons. In doing so, they face many operational questions, including on the degree of transparency and the choice of markets and counterparties. This paper identifies elements of best practice in official foreign exchange intervention, presents survey evidence on intervention practices in developing countries, and assesses the effectiveness of intervention in Mexico and Turkey.
Foreign Exchange Intervention Rules For Central Banks A Risk Based Framework
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Author : Romain Lafarguette
language : en
Publisher: International Monetary Fund
Release Date : 2021-02-12
Foreign Exchange Intervention Rules For Central Banks A Risk Based Framework written by Romain Lafarguette and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-02-12 with Business & Economics categories.
This paper presents a rule for foreign exchange interventions (FXI), designed to preserve financial stability in floating exchange rate arrangements. The FXI rule addresses a market failure: the absence of hedging solution for tail exchange rate risk in the market (i.e. high volatility). Market impairment or overshoot of exchange rate between two equilibria could generate high volatility and threaten financial stability due to unhedged exposure to exchange rate risk in the economy. The rule uses the concept of Value at Risk (VaR) to define FXI triggers. While it provides to the market a hedge against tail risk, the rule allows the exchange rate to smoothly adjust to new equilibria. In addition, the rule is budget neutral over the medium term, encourages a prudent risk management in the market, and is more resilient to speculative attacks than other rules, such as fixed-volatility rules. The empirical methodology is backtested on Banco Mexico’s FXIs data between 2008 and 2016.
The Cost Of Foreign Exchange Intervention
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Author : Gustavo Adler
language : en
Publisher: International Monetary Fund
Release Date : 2016-04-12
The Cost Of Foreign Exchange Intervention written by Gustavo Adler and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-04-12 with Business & Economics categories.
The accumulation of large foreign asset positions by many central banks through sustained foreign exchange (FX) intervention has raised questions about its associated fiscal costs. This paper clarifies conceptual issues regarding how to measure these costs both from an ex-post and an ex-ante (relevant for decision making) perspective, and estimates both marginal and total costs for 73 countries over the period 2002-13. We find ex-ante marginal costs for the median emerging market economy (EME) in the inter-quartile range of 2-5.5 percent per year; while ex-ante total costs (of sustaining FX positions) in the range of 0.2-0.7 percent of GDP per year for light interveners and 0.3-1.2 percent of GDP per year for heavy interveners. These estimates indicate that fiscal costs of sustained FX intervention (via expanding central bank balance sheets) are not negligible.
Foreign Exchange Intervention As A Monetary Policy Instrument
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Author : Felix Hufner
language : en
Publisher:
Release Date : 2014-01-15
Foreign Exchange Intervention As A Monetary Policy Instrument written by Felix Hufner and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-01-15 with categories.
The Empirics Of Foreign Exchange Intervention In Emerging Markets
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Author : Mr. Cem Karacadag
language : en
Publisher: International Monetary Fund
Release Date : 2004-07-01
The Empirics Of Foreign Exchange Intervention In Emerging Markets written by Mr. Cem Karacadag and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004-07-01 with Business & Economics categories.
This paper analyzes the effects of intervention on the level and volatility of the exchange rate in Mexico and Turkey, two emerging countries that have floating exchange rate regimes. The paper finds mixed evidence on the effectiveness of intervention. In Mexico, foreign exchange sales have a small impact on the exchange rate level and raise short-term volatility, while in Turkey, intervention does not appear to affect the exchange rate level but reduces its shortterm volatility. In both cases, the findings are consistent with officially stated policy objectives, which aim to minimize the effect of intervention on the exchange rate, but cast doubt on claims that intervention is a useful tool for smoothing volatility. Although these findings cannot be generalized to other emerging markets, intervention''s apparently limited effectiveness highlights the need for central banks to use their scarce foreign reserves selectively and parsimoniously.
Integrated Policy Framework Principles For The Use Of Foreign Exchange Intervention
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Author : International Monetary Fund. Monetary and Capital Markets Department
language : en
Publisher: International Monetary Fund
Release Date : 2023-12-21
Integrated Policy Framework Principles For The Use Of Foreign Exchange Intervention written by International Monetary Fund. Monetary and Capital Markets Department and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-12-21 with Business & Economics categories.
This note guides policy advice on the use of foreign exchange intervention (FXI) as part of the Integrated Policy Framework (IPF) in Fund surveillance. The note provides general principles for the advice in countries with flexible exchange rates and sets out three use cases for FXI that are tied to specific frictions. It explores the use of FXI as part of an overall policy response, allowing the advice to differ with shocks, frictions, and country-specific circumstances.