Official Foreign Exchange Intervention
International Monetary Fund Staff, Shogo Ishii, MedzinŠrodnż menovż fond, International Monetary Fund, Roberto Pereira Guimar„es, Jorge IvŠn Canales Kriljenko, Cem Karacadag
International Monetary Fund, Mar 2, 2006 - Business & Economics - 47 pages
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.
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amount auctions Bank of Japan Bank of Turkey bank's banks in developing bid-offer spreads Canales-Kriljenko Central Bank Intervention conducted counterparties depreciations Developing and Transition developing countries developing economies discretionary disorderly markets domestic currency effectiveness of intervention empirical estimated exchange market turnover exchange order flow exchange rate changes exchange rate level exchange rate movements exchange rate regimes exchange rate volatility flexible exchange rate floating exchange rate foreign currency foreign exchange intervention foreign exchange market foreign exchange operations foreign exchange positions foreign exchange sales forward market GARCH IMF's impact of intervention Interest differential interest rate International Monetary Fund international reserves intervention policies Karacadag liquidity long-term volatility macroeconomic market conditions market makers market participants Mexico and Turkey monetary policy Nonstationary official intervention open foreign exchange policy credibility preannounced put options regressions shocks spot market sterilized supply foreign exchange survey respondents tion Transition Economies Turkey U.S. dollar vention