Fx Intervention To Stabilize Or Manipulate The Exchange Rate Inference From Profitability
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Fx Intervention To Stabilize Or Manipulate The Exchange Rate Inference From Profitability
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Author : Mr.Damiano Sandri
language : en
Publisher: International Monetary Fund
Release Date : 2020-06-12
Fx Intervention To Stabilize Or Manipulate The Exchange Rate Inference From Profitability written by Mr.Damiano Sandri 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 2020-06-12 with Business & Economics categories.
We analyze the profitability of FX swaps used by the central bank of Brazil to shed light on the rationale for FX intervention. We find that swaps are profitable in expectation, suggesting that FX intervention is used to stabilize the exchange rate in the face of temporary excessive movements rather than to manipulate it away from fundamental values. In line with this interpretation, we find that the scale of FX intervention responds to the degree of exchange rate misalignment relative to UIP conditions. We also document that intervention is more aggressive when there is less uncertainty about the medium-term level of the exchange rate and when the exchange rate is overvalued rather than undervalued.
Fx Intervention To Stabilize Or Manipulate The Exchange Rate
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Author : Damiano Sandri
language : en
Publisher:
Release Date : 2022
Fx Intervention To Stabilize Or Manipulate The Exchange Rate written by Damiano Sandri and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.
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.
Initiating A True International Currency
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Author : Abdurrahman Arum Rahman
language : en
Publisher: Global Currency Initiative
Release Date : 2021-12-13
Initiating A True International Currency written by Abdurrahman Arum Rahman and has been published by Global Currency Initiative this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-12-13 with Business & Economics categories.
The US dollar and the euro are not true international currencies, but the currencies of the United States and the Euro, which are “adopted” into international currencies. We designed a truly international currency that is controlled jointly by all (member) countries in the world in a democratic and decentralized manner. The name of the system is organic. The organic system issues an international currency called organic currency. The organic currency is only for international transactions between member countries. Meanwhile, domestic transactions still use their respective national currencies. This system can provide international currency and FX reserves to all (member) countries in the world for free. This system can free all countries from government foreign debt, maintain a balance of payments, make the international monetary system stable, and eliminate the monetary crisis from its roots. This system can start from a small scale, such as ASEAN, South Asia, East Asia, Middle East, Latin America, East Africa, West, Central, and other regions. Unlike the Euro model, this system does not require economic integration. So all countries in the world can join in their condition as they are. In this third edition book, we deepen the theory, improve the plot, sharpen the analysis, add examples, remove some less essential parts, and add references to raise academic standards. We maintain a very simple writing system, easy to read, accompanied by empirical examples and easy-to-understand illustrations. We want the discussion of the international economic and monetary system to be “friendly” for all and “not scary”. We avoid very technical terms. Even if there are, we always provide very simple explanations and illustrations. Everyone can read this book. Because international currency is of public interest. Every individual on earth has the right to know clearly.
Uncovering Cip Deviations In Emerging Markets Distinctions Determinants And Disconnect
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Author : Eugenio Cerutti
language : en
Publisher: International Monetary Fund
Release Date : 2023-02-10
Uncovering Cip Deviations In Emerging Markets Distinctions Determinants And Disconnect written by Eugenio Cerutti 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 2023-02-10 with Business & Economics categories.
We provide a systematic empirical treatment of short-term Covered Interest Parity (CIP) deviations for a large set of emerging market (EM) currencies. EM CIP deviations have much larger volatilities than most G10 currencies and move in an opposite direction during global risk-off episodes. While off-shore EM CIP deviations are sensitive to changes in FX dealers’ risk-bearing capacities and global risk aversion, on-shore EM CIP deviations are largely unresponsive in segmented FX markets. Moreover, the sensitivity of offshore EM CIP deviations to global risk factors for currencies with segmented FX markets is stronger compared to their counterparts with integrated FX markets. We find weak evidence of country default risk affecting EM CIP deviations after accounting for global factors.
Menggagas Mata Uang Internasional Yang Sesungguhnya
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Author : Abdurrahman Arum Rahman
language : id
Publisher: Global Currency Initiative
Release Date : 2021-12-13
Menggagas Mata Uang Internasional Yang Sesungguhnya written by Abdurrahman Arum Rahman and has been published by Global Currency Initiative this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-12-13 with Business & Economics categories.
Dolar AS dan Euro bukanlah mata uang internasional yang sebenarnya, tapi mata uang Amerika Serikat dan Kawasan Euro yang “dipinjam” menjadi mata uang internasional. Kami mendesain mata uang internasional yang sebenarnya yang dikelola bersama-sama oleh seluruh negara di dunia secara demokratis dan terdesentralisasi. Nama sistemnya adalah sistem organik. Sistem organik mengeluarkan mata uang internasional yang disebut dengan mata uang organik. Mata uang organik hanya digunakan untuk transaksi internasional antar negara anggota. Sementara untuk transaksi domestik tetap menggunakan mata uang nasional masing-masing negara. Sistem ini bisa memberikan mata uang internasional dan cadangan devisa kepada semua negara (anggota) di dunia secara gratis. Sistem ini bisa membebaskan semua negara dari utang luar negeri (pemerintah), menjaga neraca pembayaran seimbang, membuat sistem moneter internasional stabil, dan menghapus krisis moneter sampai ke akar-akarnya. Sistem ini bisa mulai dari skala kecil, seperti ASEAN, Asia Selatan, Asia Timur, Timur Tengah, Amerika Latin, Afrika Timur, Barat, Tengah, dan kawasan lainnya. Berbeda dengan Euro, sistem ini tidak memerlukan integrasi ekonomi. Dengan demikian, semua negara di dunia pada prinsipnya bisa bergabung dalam kondisi mereka apa adanya. Dalam buku edisi ketiga ini kami memperdalam teori, memperbaiki alur, mempertajam analisis, menambah contoh, menghapus beberapa bagian yang kurang esensial, dan menambah referensi untuk meningkatkan standar akademis. Kami mempertahankan sistem penulisan yang sangat sederhana, enak dibaca, disertai dengan contoh-contoh konkret dan perumpamaan yang mudah dipahami. Kami ingin pembahasan tentang sistem ekonomi dan keuangan internasional menjadi “ramah” untuk semua kalangan dan “tidak menakutkan”. Kami menghindari istilah-istilah yang sangat teknis. Kalaupun ada, kami selalu memberikan penjelasan dan ilustrasi yang sangat sederhana. Buku ini bisa dibaca oleh semua kalangan. Karena mata uang internasional adalah kepentingan umum. Setiap individu di muka bumi berhak untuk tahu.
Foreign Exchange Intervention Under Policy Uncertainty
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Author : Gustavo Adler
language : en
Publisher: International Monetary Fund
Release Date : 2016-03-23
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 2016-03-23 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.
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.
Exchange Rate Swings And Foreign Currency Intervention
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Author : Andrew Filardo
language : en
Publisher: International Monetary Fund
Release Date : 2022-07-29
Exchange Rate Swings And Foreign Currency Intervention written by Andrew Filardo 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 2022-07-29 with Business & Economics categories.
This paper develops a new approach for exploring the effectiveness of foreign currency intervention, focusing on real exchange cycles. Using band spectrum regression methods, it examines the role of macroeconomic fundamentals in determining the equilibrium real exchange rate at short-, medium-, and low frequencies. Next, it assesses the effectiveness of FX intervention depending on the degree of cycle-specific misalignments for 26 advanced- and emerging market economies, covering the period 1990–2018, and using different techniques to mitigate endogeneity concerns. Evidence supports the hypothesis that central banks can lean effectively against short-run cyclical misalignments of the real exchange rate. The effects are present in quarterly data—i.e., at policy-relevant horizons. The effectiveness of intervention rises with the size of the misalignment, and with the duration of one-sided interventions. FX sales appear to be somewhat more effective than FX purchases, and intervention is less effective in more liquid FX markets.
Technical Trading Rule Profitability And Foreign Exchange Intervention
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Author : Blake LeBaron
language : en
Publisher:
Release Date : 2010
Technical Trading Rule Profitability And Foreign Exchange Intervention written by Blake LeBaron and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
There is reliable evidence that simple rules used by traders have some predictive value over the future movement of foreign exchange prices. This paper will review some of this evidence and discuss the economic magnitude of this predictability. The profitability of these trading rules will then be analyzed in connection with central bank activity using intervention data from the Federal Reserve. The objective is to find out to what extent foreign exchange predictability can be confined to periods of central bank activity in the foreign exchange market. The results indicate that after removing periods in which the Federal Reserve is active, exchange rate predictability is dramatically reduced.