When is foreign exchange intervention effective? Evidence from 33 countries

Arbeitspapier

This study examines foreign exchange intervention based on novel daily data covering 33 countries from 1995 to 2011. We find that intervention is widely used and an effective policy tool, with a success rate in excess of 80 percent under some criteria. The policy works well in terms of smoothing the path of exchange rates, and in stabilizing the exchange rate in countries with narrow band regimes. Moving the level of the exchange rate in flexible regimes requires that some conditions are met, including the use of large volumes and that intervention is made public and supported via communication.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1518

Classification and Topics

• Classification: Wirtschaft ; Foreign Exchange ; International Monetary Arrangements and Institutions ; Central Banks and Their Policies
• Subject: foreign exchange intervention ; exchange rate regimes ; effectiveness measures ; communication ; capital controls

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fratzscher, Marcel ; Gloede, Oliver ; Menkhoff, Lukas ; Sarno, Lucio ; Stöhr, Tobias
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/157520
• Last update: 10.03.2025, 11:45 AM CET