Official Intervention In The Foreign Exchange Market PDF Download
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Author | : Roberto Pereira Guimarães |
Publisher | : International Monetary Fund |
Total Pages | : 45 |
Release | : 2003-07-01 |
Genre | : Business & Economics |
ISBN | : 145185711X |
Download Official Intervention in the Foreign Exchange Market Book in PDF, ePub and Kindle
This paper offers guidance on the operational aspects of official intervention in the foreign exchange market, particularly in developing countries with flexible exchange rate regimes. A brief survey of the literature and country experience is followed by an analysis of the objectives, timing, amount, degree of transparency, and choice of markets and counterparties in conducting intervention. The analysis highlights the difficulty of detecting exchange rate misalignments and disorderly markets, and argues in favor of parsimony in official intervention. Determining the timing and amount of intervention is a highly subjective excercise, and some degree of discretion is almost necessary, though policy rules may serve as "rules of thumb."
Author | : Felix Hüfner |
Publisher | : Springer Science & Business Media |
Total Pages | : 180 |
Release | : 2012-12-06 |
Genre | : Business & Economics |
ISBN | : 3790826723 |
Download Foreign Exchange Intervention as a Monetary Policy Instrument Book in PDF, ePub and Kindle
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.
Author | : Lucio Sarno |
Publisher | : |
Total Pages | : 56 |
Release | : 2001 |
Genre | : Foreign exchange |
ISBN | : |
Download Official Intervention in the Foreign Exchange Market Book in PDF, ePub and Kindle
Author | : Mr.Jorge Iván Canales Kriljenko |
Publisher | : International Monetary Fund |
Total Pages | : 58 |
Release | : 2006-03-02 |
Genre | : Business & Economics |
ISBN | : 9781589064218 |
Download Official Foreign Exchange Intervention Book in PDF, ePub and Kindle
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.
Author | : Lucio Sarno |
Publisher | : |
Total Pages | : 344 |
Release | : 2002 |
Genre | : Business & Economics |
ISBN | : |
Download The Economics of Exchange Rates Book in PDF, ePub and Kindle
Table of contents
Author | : Romain Lafarguette |
Publisher | : International Monetary Fund |
Total Pages | : 33 |
Release | : 2021-02-12 |
Genre | : Business & Economics |
ISBN | : 1513569406 |
Download Foreign Exchange Intervention Rules for Central Banks: A Risk-based Framework Book in PDF, ePub and Kindle
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.
Author | : Jorge Iván Canales-Kriljenko |
Publisher | : |
Total Pages | : 44 |
Release | : 2006 |
Genre | : |
ISBN | : |
Download Official Intervention in the Foreign Exchange Market Book in PDF, ePub and Kindle
This paper offers guidance on the operational aspects of official intervention in the foreign exchange market, particularly in developing countries with flexible exchange rate regimes. A brief survey of the literature and country experience is followed by an analysis of the objectives, timing, amount, degree of transparency, and choice of markets and counterparties in conducting intervention. The analysis highlights the difficulty of detecting exchange rate misalignments and disorderly markets, and argues in favor of parsimony in official intervention. Determining the timing and amount of intervention is a highly subjective exercise, and some degree of discretion is almost always necessary, though policy rules may serve as rules of thumb.
Author | : Michael D. Bordo |
Publisher | : University of Chicago Press |
Total Pages | : 453 |
Release | : 2015-03-02 |
Genre | : Business & Economics |
ISBN | : 022605151X |
Download Strained Relations Book in PDF, ePub and Kindle
During the twentieth century, foreign-exchange intervention was sometimes used in an attempt to solve the fundamental trilemma of international finance, which holds that countries cannot simultaneously pursue independent monetary policies, stabilize their exchange rates, and benefit from free cross-border financial flows. Drawing on a trove of previously confidential data, Strained Relations reveals the evolution of US policy regarding currency market intervention, and its interaction with monetary policy. The authors consider how foreign-exchange intervention was affected by changing economic and institutional circumstances—most notably the abandonment of the international gold standard—and how political and bureaucratic factors affected this aspect of public policy.
Author | : Rasmus Fatum |
Publisher | : |
Total Pages | : 52 |
Release | : 2003 |
Genre | : Foreign exchange administration |
ISBN | : |
Download Effectiveness of Official Daily Foreign Exchange Market Intervention Operations in Japan Book in PDF, ePub and Kindle
Japanese official intervention in the foreign exchange market is of by far the largest magnitude in the world, despite little or no evidence that it is effective in moving exchange rates. This paper investigates the effectiveness of intervention using recently published Japanese official daily data and an event study methodology. Focusing on daily Japanese and US official intervention operations, we identify separate intervention episodes' and analyze the subsequent effect on the exchange rate. Using the non-parametric sign test and matched-sample test, we find strong evidence that sterilized intervention systemically affects the exchange rate in the short-run (less than one month). This result holds even when intervention is not associated with (simultaneous) interest rate changes, whether or not intervention is secret' (in the sense of no official reports or rumors of intervention reported over the newswires), and against other robustness checks. Large-scale (amounts over $1 billion) intervention, coordinated with the Bank of Japan and the Federal Reserve working in unison, give the highest success rate.
Author | : Roberto Pereira Guimarães |
Publisher | : International Monetary Fund |
Total Pages | : 34 |
Release | : 2004-07-01 |
Genre | : Business & Economics |
ISBN | : 1451854641 |
Download The Empirics of Foreign Exchange Intervention in Emerging Markets Book in PDF, ePub and Kindle
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.