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Author: Roberto Pereira Guimarães Publisher: International Monetary Fund ISBN: 1451854641 Category : Business & Economics Languages : en Pages : 34
Book Description
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.
Author: Roberto Pereira Guimarães Publisher: International Monetary Fund ISBN: 1451854641 Category : Business & Economics Languages : en Pages : 34
Book Description
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.
Author: Mr.Jorge Iván Canales Kriljenko Publisher: International Monetary Fund ISBN: 1451851847 Category : Business & Economics Languages : en Pages : 60
Book Description
Based on evidence obtained from the IMF's 2001 Survey on Foreign Exchange Market Organization, the author argues that, for several reasons, some central banks in developing and transition economies may be able to conduct foreign exchange intervention more effectively than the central banks of developed countries issuing the major international currencies. First, these central banks do not always fully sterilize their foreign exchange interventions. In addition, they issue regulations and conduct their foreign exchange operations in a way that increases the central bank's information advantage and the size of their foreign exchange intervention relative to foreign exchange market turnover. Some of the central banks also use moral suasion to support their foreign exchange interventions.
Author: Mr.Matthew S Malloy Publisher: International Monetary Fund ISBN: 1475557310 Category : Business & Economics Languages : en Pages : 28
Book Description
Using panel data for 15 economies from 2001-12, I identify determinants of central bank foreign exchange intervention in emerging markets (“EMs”) with flexible to moderately managed exchange rates. Similar to other studies, I find that central banks tend to “lean against the wind,” buying/selling more foreign exchange in response to greater short-run and medium-run appreciation/depreciation pressures. The panel structure provides a framework to test whether other macroeconomic variables influence the different rates of reserve accumulation between economies. In testing other variables, I find evidence of both precautionary and external competitiveness motives for reserve accumulation.
Author: Gustavo Adler Publisher: International Monetary Fund ISBN: 1513534602 Category : Business & Economics Languages : en Pages : 42
Book Description
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.
Author: Mr.Jorge Iván Canales Kriljenko Publisher: International Monetary Fund ISBN: 9781589064218 Category : Business & Economics Languages : en Pages : 58
Book Description
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: Roberto Pereira Guimarães Publisher: International Monetary Fund ISBN: 145185711X Category : Business & Economics Languages : en Pages : 45
Book Description
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: Mr.Jonathan David Ostry Publisher: International Monetary Fund ISBN: 1475554281 Category : Business & Economics Languages : en Pages : 25
Book Description
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.
Author: Gustavo Adler Publisher: International Monetary Fund ISBN: 1513536451 Category : Business & Economics Languages : en Pages : 29
Book Description
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.
Author: Felix Hüfner Publisher: Springer Science & Business Media ISBN: 3790826723 Category : Business & Economics Languages : en Pages : 180
Book Description
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: International Monetary Fund. Monetary and Capital Markets Department Publisher: International Monetary Fund ISBN: Category : Business & Economics Languages : en Pages : 61
Book Description
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.
Author: Roberto Pereira Guimarães
Author: Roberto Pereira Guimarães
Author: Mr.Jorge Iván Canales Kriljenko
Author: Mr.Matthew S Malloy
Author: Gustavo Adler
Author: Mr.Jorge Iván Canales Kriljenko
Author: Roberto Pereira Guimarães
Author: Mr.Jonathan David Ostry
Author: Gustavo Adler
Author: Felix Hüfner
Author: International Monetary Fund. Monetary and Capital Markets Department