Foreign Exchange Intervention: Theory and Evidence

Tiwari, Kashi Nath; Almekinders, G.J.

doi:10.2307/1061338

Cited by 21 publications

(4 citation statements)

References 64 publications

(102 reference statements)

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“…Since exports are generally considered to depend on the RER, this component of supply of foreign currency is assumed to be a positive function of the RER. Second source of the supply of foreign ) (Almekinders, 1995;Grauwe & Grimaldi, 2006) 3 . So, the supply of foreign currency in the foreign exchange market is modelled as .......... ( 5)…”

Section: Exchange Rate Dynamicsmentioning

confidence: 99%

“…Since 4 Almekinders (1995) views that the sterilized interventions affect the exchange rate through the portfolio balance channel and Archer (2005) adds two additional channels -signaling or expectation, and the order flows. In the portfolio balance channel, portfolio reallocation changes relative prices in the process and one type of the relative price changes might be exchange rates (Mongkol, 2011).…”

Section: Exchange Rate Dynamicsmentioning

confidence: 99%

“…In order to maintain a competitive RER (and even a stable nominal exchange rate), 6 central banks actively participate in the foreign exchange market. A competitive RER is considered as an important development strategy (Eichengreen, 2008), and the exchange rate stability is considered as a public good (Almekinders, 1995). Through interventions, central banks try to limit the fluctuations of the exchange rate around the fundamental trend line Calvo and Reinhart (2002) avoiding appreciation due to competitiveness concerns and depreciation due to balance sheet effects (Rajan, 2010).…”

Section: Reserve Accumulation Processmentioning

confidence: 99%

“…Following Almekinders (1995), foreign exchange interventions are modelled in terms of an intervention response function as , where F is a row vector containing response coefficients, and is a column vector of state variables 7 . Central banks, looking at the real exchange rate, intervene in the foreign exchange market -supplying and buying foreign currencies 8 .…”

Section: Reserve Accumulation Processmentioning

confidence: 99%

See 3 more Smart Citations

Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia

Shrestha¹

2016

NRB Econ. Rev.

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In recent years, many emerging countries have been accumulating substantial amount of international reserves by outpacing traditional benchmark in response to a series of financial crises in the world. In this context, this paper constructs a dynamic macro model with new monetary policy rule to examine the implications of international reserve accumulation for macroeconomic outcomes such as economic growth and inflation. Such a macro model is empirically examined in the data of South Asian countries, namely Bangladesh, India, Nepal, Pakistan and Sri Lanka by using Panel VAR method for the period of 1990-2014. The empirical results show that increase in international reserves tends to cause higher economic growth in these countries but without significant impact on inflation. This implies that these countries can move further utilizing the accumulated international reserves productively which will enhance economic growth and maintain internal and external balances.

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Section: Exchange Rate Dynamicsmentioning

confidence: 99%

Section: Exchange Rate Dynamicsmentioning

confidence: 99%

Section: Reserve Accumulation Processmentioning

confidence: 99%

Section: Reserve Accumulation Processmentioning

confidence: 99%

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Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia

Shrestha¹

2016

NRB Econ. Rev.

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Intervention policy of the BoJ: A unified approach

Beine

Bernal²,

Gnabo

et al. 2009

Journal of Banking & Finance

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Intervening in the FX market implies a complex decision process for central banks. Monetary authorities have to decide whether to intervene or not, and if so, when and how. Since the successive steps of this procedure are likely to be highly interdependent, we adopt a nested logit approach to capture their relationships and to characterize the prominent features of the various steps of the intervention decision. Our findings shed some light on the determinants of central bank interventions, on the so-called secrecy puzzle and on the identification of the variables influencing the detection of foreign exchange transactions by market traders. Financial support from the Belgian National Fund for Scientific Research (FRFC Program) is gratefully acknowledged. We would like to thank Cinzia Cirillo for computational assistance as well as Agnès Bénassy-Quéré for providing us with estimates of the fundamental exchange rate value. We are also grateful to Gabriele Galati for sharing his dataset that allows to make some cross-checks with our findings. We thank participants of seminars and conference held in Luxembourg, Paris Nanterres and at the Bank of Canada for comments and suggestions, and in particular G. Galati, C. De Souza and R. Miller. The usual disclaimer applies.

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Self-selection and treatment effects: Revisiting the effectiveness of foreign exchange intervention

Pontines

2018

Journal of Macroeconomics

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Foreign Exchange Intervention: Theory and Evidence

Cited by 21 publications

References 64 publications

Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia

Macroeconomic Impact of International Reserves: Empirical Evidence from South Asia

Intervention policy of the BoJ: A unified approach

Self-selection and treatment effects: Revisiting the effectiveness of foreign exchange intervention

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