IDEAS home Printed from https://ideas.repec.org/a/eee/jimfin/v156y2025ics0261560625000907.html
   My bibliography  Save this article

The trend effect of foreign exchange intervention

Author

Listed:
  • Fatum, Rasmus
  • Yamamoto, Yohei
  • Chen, Binwei

Abstract

The 2022 and the 2010–2011 Bank of Japan interventions provide an opportunity for investigating whether unusually large-scale and infrequent interventions are capable of generating trend effects. To this end, we estimate the counterfactual exchange rate and analyze structural changes in the level and the trend of the gap sequence between actual and counterfactual exchange rates. Our results show that the trend of the gap sequence reversed in the desired direction around the intervention dates, indicating that the intervention policy instrument is potentially powerful enough to generate long-term trend effects. This is an important insight not previously found in the intervention literature.

Suggested Citation

  • Fatum, Rasmus & Yamamoto, Yohei & Chen, Binwei, 2025. "The trend effect of foreign exchange intervention," Journal of International Money and Finance, Elsevier, vol. 156(C).
    • Handle: RePEc:eee:jimfin:v:156:y:2025:i:c:s0261560625000907
    DOI: 10.1016/j.jimonfin.2025.103355
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0261560625000907
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jimonfin.2025.103355?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Foreign Exchange Intervention; Counterfactual Exchange Rate; Currency Factors; Synthetic Control Methods; Structural Changes;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jimfin:v:156:y:2025:i:c:s0261560625000907. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30443 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.