Foreign Exchange Intervention in Developing and Transition Economies: Results of a Survey
International Monetary Fund, May 1, 2003 - Business & Economics - 59 pages
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.
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Appendix Table Bank of Japan banks in developing bid-offer spread classiﬁcation as published conduct foreign exchange considered as emerging Conventional ﬁxed pegs country-speciﬁc currency crawling bands Crawling pegs Currency board developing and transition Developments and Prospects domestic currency Economies Total Emerging Emerging Market Financing Exchange Market Organization exchange market turnover exchange order flow exchange rate regimes facto exchange rate ﬁxed peg arrangement foreign exchange intervention foreign exchange market foreign exchange order foreign exchange positions forward contracts Fund member developing Fund's quarterly publication horizontal bands IMF's de facto information advantage International Financial Statistics issuing the major Karacadag major international currencies market makers Number of countries open foreign exchange path for exchange Pegs with horizontal percent of countries percent of survey preannounced path publication Emerging Market quarterly publication Emerging Quarterly Report rate regime classiﬁcation rates within crawling Regime and Market Report on Developments Survey on Foreign transition countries considered Transition Economies Total