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Foreign exchange market pressure and capital controls

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  • Akram, Gilal Muhammad
  • Byrne, Joseph P.

Abstract

This novel empirical study contributes to the literature on the foreign exchange market and financial liberalisation. We examine the determinants of exchange market pressure (EMP) in a panel of forty countries, using a statistical approach to measure market pressure, with particular focus upon the impact of capital controls. We also consider whether EMP is related to a range of other macroeconomic indicators, policy variables and trade openness. We find that capital controls are associated with weaker currencies, especially for advanced countries. Our results are robust to potential endogeneity and different measures of exchange market pressure.

Suggested Citation

  • Akram, Gilal Muhammad & Byrne, Joseph P., 2015. "Foreign exchange market pressure and capital controls," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 37(C), pages 42-53.
  • Handle: RePEc:eee:intfin:v:37:y:2015:i:c:p:42-53
    DOI: 10.1016/j.intfin.2015.04.004
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    Cited by:

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    3. Ifedolapo Olabisi Olanipekun & Hasan Güngör & Godwin Olasehinde-Williams, 2019. "Unraveling the Causal Relationship Between Economic Policy Uncertainty and Exchange Market Pressure in BRIC Countries: Evidence From Bootstrap Panel Granger Causality," SAGE Open, , vol. 9(2), pages 21582440198, June.
    4. Hossfeld, Oliver & Pramor, Marcus, 2018. "Global liquidity and exchange market pressure in emerging market economies," Discussion Papers 05/2018, Deutsche Bundesbank.
    5. Michael Melvin & Frank Westermann, 2020. "Chinese Exchange Rate Policy: Lessons for Global Investors," CESifo Working Paper Series 8493, CESifo.
    6. Ifedolapo Olabisi Olanipekun & Godwin Olasehinde-Williams & Hasan Güngör, 2019. "Impact of Economic Policy Uncertainty on Exchange Market Pressure," SAGE Open, , vol. 9(3), pages 21582440198, September.
    7. Eichler, Stefan & Roevekamp, Ingmar, 2018. "A market-based measure for currency risk in managed exchange rate regimes," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 57(C), pages 141-159.

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