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An assessment of some open issues in the analysis of foreign exchange intervention

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  • Paolo Vitale

    (D'Annunzio University and CEPR, Italy)

Abstract

We discuss some fundamental aspects of the study of foreign exchange intervention. In particular, we analyse some unresolved issues, such as the secrecy puzzle, the relevance of the signalling and portfolio-balance effect hypotheses, the identification of the impact of foreign exchange intervention on currency values. We argue that: (i) the unresolved nature of these issues is partly due to the absence of a market microstructure perspective in most of the existing analysis of foreign exchange intervention; and (ii) that recent promising advances in this strand of research have not fully exploited the potential of such perspective. Copyright © 2007 John Wiley & Sons, Ltd.

Suggested Citation

  • Paolo Vitale, 2007. "An assessment of some open issues in the analysis of foreign exchange intervention," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 155-170.
  • Handle: RePEc:ijf:ijfiec:v:12:y:2007:i:2:p:155-170
    DOI: 10.1002/ijfe.327
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    References listed on IDEAS

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    Cited by:

    1. Shinji Takagi & Hiroki Okada, 2013. "Central Bank Independence and the Signaling Effect of Intervention: A Preliminary Exploration," Discussion Papers in Economics and Business 13-04, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    2. Lukas Menkhoff, 2010. "High-Frequency Analysis Of Foreign Exchange Interventions: What Do We Learn?," Journal of Economic Surveys, Wiley Blackwell, vol. 24(1), pages 85-112, February.
    3. Ole Jann & Christoph Schottmüller, 2015. "How Jeremy Bentham would defend against coordinated attacks," Discussion Papers 15-11, University of Copenhagen. Department of Economics.
    4. Reitz, Stefan & Taylor, Mark P., 2008. "The coordination channel of foreign exchange intervention: A nonlinear microstructural analysis," European Economic Review, Elsevier, vol. 52(1), pages 55-76, January.
    5. Ronald McDonald & Xuxin Mao, 2016. "Japan's Currency Intervention Regimes: A Microstructural Analysis with Speculation and Sentiment," Working Papers 2016_06, Business School - Economics, University of Glasgow.
    6. Brause, Alexander, 2008. "Foreign exchange interventions in emerging market countries: New lessons from Argentina," W.E.P. - Würzburg Economic Papers 79, University of Würzburg, Chair for Monetary Policy and International Economics.
    7. João Barata R. B. Barroso, 2014. "Realized Volatility as an Instrument to Official Intervention," Working Papers Series 363, Central Bank of Brazil, Research Department.

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