Download or read book Foreign Exchange Intervention A Dataset of Public Data and Proxies written by Gustavo Adler and published by International Monetary Fund. This book was released on 2021-02-19 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: Foreign exchange intervention (FXI) is a highly debated topic. Yet, comprehensive and comparable data on FXI is hard to find. This paper provides a new dataset of FXI covering a large number of countries over the period 2000-20 at monthly and quarterly frequencies. It includes publicly available data for about 40 countries and carefully constructed proxies for 122 countries. Proxies are focused on both spot and derivative transactions that alter the central bank’s foreign currency position and account for a wide range of central bank operations, including vis-à-vis residents, the first proxy to do so to our knowledge. The paper discusses the merits of the new proxy relative to coarser measures traditionally used like the change in reserves, and potential definitional differences with published data. The paper also presents stylized facts using our newly constructed FXI proxies.
Download or read book Foreign Exchange Intervention written by Gustavo Adler and published by International Monetary Fund. This book was released on 2011-07-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines foreign exchange intervention practices and their effectiveness using a new qualitative and quantitative database for a panel of 15 economies covering 2004 - 10, with special focus on Latin America. Qualitatively, it examines institutional aspects such as declared motives, instruments employed, the use of rules versus discretion, and the degree of transparency. Quantitatively, it assesses the effectiveness of sterilized interventions in influencing the exchange rate using a two-stage IV-panel data approach to overcome endogeneity bias. Results suggest that interventions slow the pace of appreciation, but the effects decrease rapidly with the degree of capital account openness. At the same time, interventions are more effective in the context of already ?overvalued' exchange rates.
Download or read book Unveiling the Effects of Foreign Exchange Intervention written by Gustavo Adler and published by International Monetary Fund. This book was released on 2015-06-23 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effect of foreign exchange intervention on the exchange rate relying on an instrumental-variables panel approach. We find robust evidence that intervention affects the level of the exchange rate in an economically meaningful way. A purchase of foreign currency of 1 percentage point of GDP causes a depreciation of the nominal and real exchange rates in the ranges of [1.7-2.0] percent and [1.4-1.7] percent respectively. The effects are found to be quite persistent. The paper also explores possible asymmetric effects, and whether effectiveness depends on the depth of domestic financial markets.
Download or read book Does Foreign Exchange Intervention Work written by Kathryn M. Dominguez and published by Peterson Institute for International Economics. This book was released on 1993 with total page 196 pages. Available in PDF, EPUB and Kindle. Book excerpt: How much impact on exchange rates do central banks have when they buy and sell currencies? According to many analysts, such intervention has no independent impact. This book challenges the conventional wisdom, demonstrating that such intervention can be an effective and extremely important tool for policymakers. Using previously unavailable daily intervention data from the US Federal Reserve and German Bundesbank, the authors show that even "sterilized" intervention -intervention that entails no corresponding changes in monetary policy- has a significant effect. A key element is whether the intervention is known to the public: widespread market awareness of the activity adds substantially to its payoff. Authors Dominguez and Frankel draw implications for intervention policy and its role in international economic policy coordination.
Download or read book Preemptive Policies and Risk Off Shocks in Emerging Markets written by Ms. Mitali Das and published by International Monetary Fund. This book was released on 2022-01-07 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that “preemptive” capital flow management measures (CFM) can reduce emerging markets and developing countries’ (EMDE) external finance premia during risk-off shocks, especially for vulnerable countries. Using a panel dataset of 56 EMDEs during 1996–2020 at monthly frequency, we document that countries with preemptive policies in place during the five year window before risk-off shocks experienced relatively lower external finance premia and exchange rate volatility during the shock compared to countries which did not have such preemptive policies in place. We use the episodes of Taper Tantrum and COVID-19 as risk-off shocks. Our identification relies on a difference-in-differences methodology with country fixed effects where preemptive policies are ex-ante by construction and cannot be put in place as a response to the shock ex-post. We control the effects of other policies, such as monetary policy, foreign exchange interventions (FXI), easing of inflow CFMs and tightening of outflow CFMs that are used in response to the risk-off shocks. By reducing the impact of risk-off shocks on countries’ funding costs and exchange rate volatility, preemptive policies enable countries’ continued access to international capital markets during troubled times.
Download or read book Foreign Exchange Intervention A New Database written by Marcel Fratzscher and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Patterns of Foreign Exchange Intervention under Inflation Targeting written by Gustavo Adler and published by International Monetary Fund. This book was released on 2020-05-29 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper documents the use of foreign exchange intervention (FXI) across countries and monetary regimes, with special attention to its use under inflation targeting (IT). We find significant differences between advanced and emerging market economies, with the former group conducting FXI limitedly and broadly symmetrically, while the use of this policy instrument in emerging market countries is pervasive and mostly asymmetric (biased towards purchasing foreign currency, even after taking into account precautionary motives). Within emerging markets, the use of FXI is common both under IT and non-IT regimes. We find no evidence of FXI being used in response to inflation developments, while there is strong evidence that FXI responds to exchange rates, indicating that IT central banks in EMDEs have dual inflation/exchange rate objectives. We also find a higher propensity to overshoot inflation targets in emerging market economies where FXI is more pervasive.
Download or read book Foreign Exchange Intervention written by Geert J. Almekinders and published by Edward Elgar Publishing. This book was released on 1995 with total page 248 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book explains why central banks continue to carry out foreign exchange interventions despite their poor track record. It uses confidential daily intervention data from the Bundesbank and the Federal Reserve.
Download or read book SHOCKS AND CAPITAL FLOWS written by GASTON. SAHAY GELOS (RATNA.) and published by International Monetary Fund. This book was released on 2023 with total page 2040 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Macroeconomic Impact of Foreign Exchange Intervention Some Cross country Empirical Findings written by Mr. Zhongxia Jin and published by International Monetary Fund. This book was released on 2021-04-30 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: Based on VAR analyses across 26 countries, we show that, although foreign exchange intervention (FXI) is effective in stabilizing the nominal exchange rate in the short run, its impacts on the real exchange rate are less significant: Limitations on nominal exchange rate flexibility may induce adjustments to the real exchange rate through domestic prices. We find that countries that intervene more heavily in response to external shocks experience greater general and asset price volatility, which is not conducive to countering the impact of external shocks. We show that China’s macroeconomic responses to external shocks are broadly consistent with international experiences among intervening countries. The simple methodological framework adopted in this paper is meant to examine a broad set of macroeconomic variables and bears limitations; our findings serve to motivate more structural analysis on FXI’s macroeconomic impacts going forward.
Download or read book Renminbi from Marketization to Internationalization written by Zhongxia Jin and published by Taylor & Francis. This book was released on 2022-05-12 with total page 143 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study looks into the significance of a floating exchange rate regime, further development of the foreign exchange derivatives market, and concurrent internationalization of the Renminbi (RMB) for a resilient, open, and growing Chinese economy. The first chapter analyzes the macroeconomic impact of foreign exchange intervention based on empirical studies on 26 economies, explaining why most countries favor a floating exchange rate regime under the existing international monetary system. The second chapter discusses the macroeconomic and microeconomic conditions that would facilitate a successful transition to a floating exchange rate. The final two chapters discuss the importance of further developing the foreign exchange derivatives market in China and explores paths toward further opening-up of the capital market and internationalization of the RMB under a floating exchange rate. Based on the authors’ decades of reflections and systematic analysis on real cases both in China and abroad, the title sheds lights on China’s exchange rate issues and research on exchange rate policy. This book will be an essential reference for scholars, students, professionals, and policymakers interested in exchange rate, currency internationalization, the financial market, especially the derivatives market, and the Chinese economy.
Download or read book An Estimated DSGE Model for Integrated Policy Analysis written by Kaili Chen and published by International Monetary Fund. This book was released on 2023-06-30 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate a New Keynesian small open economy model which allows for foreign exchange (FX) market frictions and a potential role for FX interventions for a large set of emerging market economies (EMEs) and some inflation targeting (IT) advanced economy (AE) countries serving as a control group. Next, we use the estimated model to examine the empirical support for the view that interest rate policy may not be sufficient to stabilize output and inflation following capital outflow shocks, and the extent to which FX interventions (FXI) can improve policy tradeoffs. Our results reveal significant structural differences between AEs and EMEs—in particular FX market depth—leading to different transmission of capital outflow shocks which justifies occasional use of FXI in some EMEs in certain situations. Our analysis also highlights the critical importance of accounting for the endogeneity of FXI behavior when assessing FX market depth and policy tradeoffs associated with volatile capital flows in past episodes.
Download or read book Escaping the Financial Dollarization Trap The Role of Foreign Exchange Intervention written by Paul Castillo and published by International Monetary Fund. This book was released on 2024-06-21 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial dollarization is considered a source of macroeconomic instability in many emerging economies. Dollarization constrains the ability of central banks to stimulate output during economic downturns. In contrast to the conventional monetary transmission mechanism, a monetary policy loosening in a dollarized economy leads to a currency depreciation, adverse balance sheet effects, and a contraction in investment and output growth. In this paper we evaluate the role of foreign exchange reserves in facilitating macroeconomic stabilization in a financially dollarized economy. We first show empirically that foreign exchange intervention in response to capital outflows can largely reduce the volatility of output and the real exchange rate in dollarized economies. We then develop a small open economy model with foreign currency debt and balance sheets effects. Our quantitative model shows that an active foreign exchange intervention policy is sufficient for offsetting the output volatility associated with financial dollarization. These results can explain the prevalence of low macroeconomic volatility in some dollarized economies (Christiano et al., 2021) and they highlight the role of foreign exchange reserves in reducing the welfare costs of dollarization.
Download or read book Philippines written by International Monetary Fund. Asia and Pacific Dept and published by International Monetary Fund. This book was released on 2022-12-15 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: Philippines: Selected Issues
Download or read book External Shocks Policies and Tail Shifts in Real Exchange Rates written by Mr. Nicolas E Magud and published by International Monetary Fund. This book was released on 2023-06-23 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use panel quantile regressions to study extreme (rather than average) movements in the distribution of the real effective exchange rate (REER) of small open economies. We document that global uncertainty (VIX) and global financial conditions (U.S. monetary policy) shocks have a strong impact on the distribution of the REER changes, with larger impacts in the tails of the distribution, and especially in economies with shallower FX markets, lower central bank credibility, and higher credit risk (i.e., weaker macro fundamentals). Foreign exchange intervention (FXI) partially offsets the impact of these shocks, especially in the left tail (large depreciations) and particularly in economies with weaker fundamentals but, more importantly, when FXI is used sporadically. Thus, our results highlight the importance of deepening FX markets, improving central bank credibility, and strengthening macro fundamentals against the potential dynamic trade-offs of overreliance on a policy that would exacerbate the previously mentioned frictions. While our results point to low effectiveness of capital flow management in preventing large REER movements, they seem to enable more impactful foreign exchange intervention in the immediate aftermath of shocks.
Download or read book Official Foreign Exchange Intervention written by Shogo Ishii and published by . This book was released on 2002 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book OECD Economic Surveys Peru 2023 written by OECD and published by OECD Publishing. This book was released on 2023-09-27 with total page 141 pages. Available in PDF, EPUB and Kindle. Book excerpt: Peru's solid macroeconomic framework has driven substantial economic growth and poverty reduction in the past two decades. While the economy swiftly rebounded from the pandemic due to strong policy support, it exposed structural weaknesses such as a large informal sector and stark regional disparities in accessing public services.
