Abstract

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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Cited By

  • Andersen, Torben, and Tim Bollerslev, 1998, “Answering the Skeptics: Yes, Standard Volatility Models Do Provide Accurate Forecasts,” International Economic Review, Vol. 39, No. 4, pp. 885 –905.

    • Search Google Scholar
    • Export Citation
  • Bank for International Settlements, 1994, Macroeconomic and Monetary Policy Issues Raised by the Growth of Derivatives Markets (Basel).

  • Bank for International Settlements, 2001, Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity (Basel: Bank for International Settlements).

    • Search Google Scholar
    • Export Citation
  • Bank of Japan, 2000, “Outline of the Bank of Japan’s Foreign Exchange Intervention Operations.” Available via the Internet: www.boj.or.jp/en/about/basic/etc/faqkainy.htm.

    • Search Google Scholar
    • Export Citation
  • Baillie, Richard T., and William Osterberg, 1997, “Why Do Central Banks Intervene?” Journal of International Money and Finance, Vol. 16, No. 6, pp. 909 –19.

    • Search Google Scholar
    • Export Citation
  • Bartolini, Leonardo, 2002, “Foreign Exchange Swaps,” New England Economic Review, Second Quarter, p. 11.

  • Beattie, Neil, and Jean-Francois Fillion, 1999, “An Intraday Analysis of the Effectiveness of Foreign Exchange Intervention,” Bank of Canada Working Paper 99–4 (Ottawa: Bank of Canada).

    • Search Google Scholar
    • Export Citation
  • Beine, Michel, Agnès Bénassy-Quéré, and Christelle Lecourt, 2002, “Central Bank Intervention and Foreign Exchange Rates: New Evidence from FIGARCH Estimations,” Journal of International Money and Finance, Vol. 21, No. 1, pp. 115 –144.

    • Search Google Scholar
    • Export Citation
  • Bjorksten, Nils, and Anne-Marie Brook, 2002, “Exchange Rate Strategies for Small Open Developed Economies Such as New Zealand,” Reserve Bank of New Zealand Bulletin, Vol. 65 (March).

    • Search Google Scholar
    • Export Citation
  • Bonser-Neal, Catherine, and Glen Tanner, 1996, “Central Bank Intervention and the Volatility of Foreign Exchange Rates: Evidence from the Options Market,” Journal of International Money and Finance, Vol. 15, No. 6, pp. 853 –78.

    • Search Google Scholar
    • Export Citation
  • Bredin, Don, Stilianos Fountas, and Eithne Murphy, 2002, “An Empirical Analysis of Short-Run and Long-Run Irish Exports: Does Exchange Rate Volatility Matter?” Central Bank of Ireland Research Technical Paper 01/RT/02 (Dublin: Central Bank and Financial Services Authority of Ireland).

    • Search Google Scholar
    • Export Citation
  • Breuer, Peter, 1999, “Central Bank Participation in Currency Options Markets,” IMF Working Paper 99/140 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Bubula, Andrea, and Inci Otker-Robe, 2002, “The Evolution of Exchange Rate Regimes Since 1990: Evidence from De Facto Policies,” IMF Working Paper 02/155 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo A., and Carmen Reinhart, 2002, “Fear of Floating,” Quarterly Journal of Economics, Vol. 117 (May), pp. 379 –408.

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