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Foreign exchange market intervention in EMEs: what has changed?

Author

Listed:
  • Dietrich Domanski
  • Emanuel Kohlscheen
  • Ramon Moreno

Abstract

Since the Great Financial Crisis, emerging market economies have been more active in FX markets. As rising dollar debt and increased exposure to global financing flows have affected the demand and supply of foreign currency, financial stability has become an increasingly important motive for interventions. Adjustments in intervention tactics and instruments are consistent with a greater importance of financial stability considerations. Timely interventions can be effective in improving FX market liquidity, and there are credibility gains from holding foreign reserve buffers in countries with low credit ratings. Since the carrying costs of holding reserves have increased, countries with higher credit ratings may have incentives to reduce the size of reserve buffers.

Suggested Citation

  • Dietrich Domanski & Emanuel Kohlscheen & Ramon Moreno, 2016. "Foreign exchange market intervention in EMEs: what has changed?," BIS Quarterly Review, Bank for International Settlements, September.
  • Handle: RePEc:bis:bisqtr:1609f
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    References listed on IDEAS

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    Cited by:

    1. repec:kse:modern:v:2:y:2019:i:1:p:24-44 is not listed on IDEAS
    2. Andrey G. Shulgin, 2017. "A Simple Theoretical Setup for the Evaluation of Sterilized Intervention Effectiveness in a Small Open Commodity Exporting Economy," HSE Working papers WP BRP 170/EC/2017, National Research University Higher School of Economics.
    3. repec:bkr:journl:v:77:y:2018:i:2:p:68-80 is not listed on IDEAS
    4. repec:bla:reviec:v:26:y:2018:i:5:p:1130-1153 is not listed on IDEAS
    5. repec:wly:jmoncb:v:51:y:2019:i:6:p:1455-1490 is not listed on IDEAS
    6. repec:bis:bisbpc:100-02 is not listed on IDEAS
    7. Yu‐Fu Chen & Michael Funke & Richhild Moessner, 2018. "Informal one‐sided target zone model and the Swiss franc," Review of International Economics, Wiley Blackwell, vol. 26(5), pages 1130-1153, November.
    8. Bank for International Settlements, 2017. "Foreign exchange liquidity in the Americas," BIS Papers, Bank for International Settlements, number 90, June.
    9. repec:eee:japwor:v:49:y:2019:i:c:p:50-60 is not listed on IDEAS
    10. Milan Nedeljkovic & Christian Saborowski, 2019. "The Relative Effectiveness of Spot and Derivatives‐Based Intervention," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(6), pages 1455-1490, September.

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