Foreign Exchange Intervention As A Monetary Policy Instrument
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Foreign Exchange Intervention As A Monetary Policy Instrument
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Author : Felix Hüfner
language : en
Publisher: Springer Science & Business Media
Release Date : 2012-12-06
Foreign Exchange Intervention As A Monetary Policy Instrument written by Felix Hüfner and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-12-06 with Business & Economics categories.
Foreign exchange intervention is frequently being used by central banks in countries which have a floating exchange rate. Most theoretical monetary policy models, however, do not take this phenomenon into account. This book contributes to close this gap between theory and practice by interpreting foreign exchange intervention as an additional monetary policy instrument for inflation targeting central banks. In-depth empirical analyses of the foreign exchange operations and interest rate policy of five inflation targeting countries (Australia, Canada, New Zealand, Sweden and the United Kingdom) demonstrate how foreign exchange intervention is used in practice.
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.
Foreign Exchange Intervention Under Policy Uncertainty
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Author : Gustavo Adler
language : en
Publisher: International Monetary Fund
Release Date : 2016-03-17
Foreign Exchange Intervention Under Policy Uncertainty 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 2016-03-17 with Business & Economics categories.
We study the use of foreign exchange (FX) intervention as an additional policy instrument in an environment with learning, where agents infer the central bank policy rules from its policy actions. Under full information, a central bank focused on stabilizing output and inflation can achieve better outcomes by using FX intervention as an additional policy tool. Under policy uncertainty, where agents perceive that monetary policy may also have exchange rate stabilization goals, the use of FX intervention entails a trade-off, reducing output volatility while increasing inflation volatility. While having an additional policy tool is always beneficial, we find that the optimal magnitude of intervention is higher in monetary policy regimes with lower uncertainty. These results indicate that the benefits of using FX intervention as an additional stabilization tool are greater in regimes where monetary policy is credibly focused on output and inflation stabilization.
Two Targets Two Instruments
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Author : Mr.Jonathan David Ostry
language : en
Publisher: International Monetary Fund
Release Date : 2012-02-29
Two Targets Two Instruments written by Mr.Jonathan David Ostry 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 2012-02-29 with Business & Economics categories.
Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.
Foreign Exchange Intervention Under Policy Uncertainty
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Author : Juan Pablo Medina Guzman
language : en
Publisher:
Release Date : 2016
Foreign Exchange Intervention Under Policy Uncertainty written by Juan Pablo Medina Guzman and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with Banks and banking, Central categories.
We study the use of foreign exchange (FX) intervention as an additional policy instrument in an environment with learning, where agents infer the central bank policy rules from its policy actions. Under full information, a central bank focused on stabilizing output and inflation can achieve better outcomes by using FX intervention as an additional policy tool. Under policy uncertainty, where agents perceive that monetary policy may also have exchange rate stabilization goals, the use of FX intervention entails a trade-off, reducing output volatility while increasing inflation volatility. While having an additional policy tool is always beneficial, we find that the optimal magnitude of intervention is higher in monetary policy regimes with lower uncertainty. These results indicate that the benefits of using FX intervention as an additional stabilization tool are greater in regimes where monetary policy is credibly focused on output and inflation stabilization.--Abstract.
Patterns Of Foreign Exchange Intervention Under Inflation Targeting
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Author : Gustavo Adler
language : en
Publisher: International Monetary Fund
Release Date : 2020-05-29
Patterns Of Foreign Exchange Intervention Under Inflation Targeting 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 2020-05-29 with Business & Economics categories.
The paper documents the use of foreign exchange intervention (FXI) across countries and monetary regimes, with special attention to its use under inflation targeting (IT). We find significant differences between advanced and emerging market economies, with the former group conducting FXI limitedly and broadly symmetrically, while the use of this policy instrument in emerging market countries is pervasive and mostly asymmetric (biased towards purchasing foreign currency, even after taking into account precautionary motives). Within emerging markets, the use of FXI is common both under IT and non-IT regimes. We find no evidence of FXI being used in response to inflation developments, while there is strong evidence that FXI responds to exchange rates, indicating that IT central banks in EMDEs have dual inflation/exchange rate objectives. We also find a higher propensity to overshoot inflation targets in emerging market economies where FXI is more pervasive.
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.
Foreign Exchange Intervention In Inflation Targeters In Latin America
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Author : Mr.Marcos d Chamon
language : en
Publisher: International Monetary Fund
Release Date : 2019-03-01
Foreign Exchange Intervention In Inflation Targeters In Latin America written by Mr.Marcos d Chamon 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 2019-03-01 with Business & Economics categories.
Foreign exchange intervention is widely used as a policy tool, particularly in emerging markets, but many facets of this tool remain limited, especially in the context of flexible exchange rate regimes. The Latin American experience can be informative because some of its largest countries adopted floating exchange rate regimes and inflation targeting while continuing to intervene in foreign exchange markets. This edited volume reviews detailed accounts from several Latin American countries’ central banks, and it provides insight into how and with what aim many interventions were decided and implemented. This book documents the effectiveness of intervention and pays special attention to the role of foreign exchange intervention policy within inflation-targeting monetary frameworks. The main lesson from Latin America’s foreign exchange interventions, in the context of inflation targeting, is that the region has had a considerable degree of success. Transparency and a clear communication policy have been key. For economies that are not highly dollarized, rules-based intervention helped contain financial instability and build international reserves while preserving inflation targets. The Latin American experience can help other countries in the design and implementation of their policies.
Monetary Policy Implementation
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Author : Inese Buzeneca
language : en
Publisher: International Monetary Fund
Release Date : 2007
Monetary Policy Implementation written by Inese Buzeneca 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 2007 with Business & Economics categories.
Since the early 1990s, the IMF has been advising countries to shift to the use of indirect instruments for executing monetary policy. This paper provides information about a monetary policy instruments database, maintained by the Monetary and Capital Markets Department of the IMF. We offer an overview of the information contained in the database in the form of comparative summary tables and graphs to illustrate the use of monetary policy instruments by groups of countries (developing, emerging market and developed countries). The main trend that can be identified from the database information is the increasing reliance on money market operations for monetary policy implementation. We emphasize the relevance and usefulness of the data collected through periodic surveys of central banks, for general descriptive and analytical purposes.
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 Foreign exchange administration 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.