Front Matter

Front Matter

Jorge Canales Kriljenko, Cem Karacadag, Roberto Guimarães, and Shogo Ishii
Published Date:
March 2006
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    © 2006 International Monetary Fund

    Production: IMF Multimedia Services Division

    Typesetting and Figures: Choon Lee and Wendy Arnold

    Cataloging-in-Publication Data

    Official foreign exchange intervention / Shogo Ishii … [et al.]—

    Washington, D.C. : International Monetary Fund, 2006.

    p. cm. — (Occasional paper; 249)

    Includes bibliographical references.

    ISBN 1-58906-421-6

    1. Foreign exchange. 2. Foreign exchange — Developing countries. 3. Foreign exchange — Mexico. 4. Foreign exchange — Turkey. I. Ishii, Shogo. II. Occasional paper (International Monetary Fund); no. 249

    HG3821.034 2006

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    The following symbols have been used throughout this paper:

    • … to indicate that data are not available;

    • — to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;

    • – between years or months (e.g., 2004–05 or January–June) to indicate the years or months covered, including the beginning and ending years or months; and

    • / between years (e.g., 2004/05) to indicate a fiscal (financial) year.

    …Billion” means a thousand million.

    Minor discrepancies between constituent figures and totals are due to rounding.

    The term …country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.


    This Occasional Paper aims to develop a deeper understanding of foreign exchange intervention in emerging markets. Central banks intervene in the foreign exchange market for several reasons, including to calm disorderly markets, correct misalignments, and accumulate reserves. The prevalence of central bank intervention in emerging markets has led to renewed interest in how central banks should intervene to maximize their efficacy. This paper sheds light on a number of operational aspects of intervention. It also presents evidence on intervention practices and characteristics based on a survey on the organization of foreign exchange markets in developing countries. The survey was carried out in 2001 by the International Monetary Fund. Finally, the paper presents empirical evidence on the effectiveness of intervention in Mexico and Turkey, two countries where intervention data are publicly available. The authors emphasize that intervention is not an independent policy tool and is most effective when the exchange rate policy is consistent with other macroeconomic policies.

    The authors are grateful to Stefan Ingves and Herve Ferhani for their support for this project. We would like to thank Kai Barvell, Hali Edison, Shyamala Gopinath, Scott Roger, Barry Topf, and Mark Zelmer for insightful comments on earlier drafts. The authors are also indebted to Nirmaleen F. Jayawardane and Ranee Sirihorachai for their excellent assistance in the preparation of the manuscript, and to Gail Berre and David Einhorn of the External Relations Department for editing and coordinating production of the publication.

    The views expressed in this paper are solely those of the authors and do not necessarily reflect the views or policies of the national authorities or the International Monetary Fund or its Executive Directors.

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