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Central bank authorities’ beliefs about foreign exchange intervention

  • Christopher J. Neely

This paper presents the results of a survey of monetary authorities with respect to foreign exchange intervention. The survey offers evidence on new issues that would otherwise be difficult to investigate, such as response times, non-foreign exchange factors in intervention and profitability. The survey also reveals new evidence on previously studied issues, such as channels of effectiveness. Respondents disagreed with predominant views on intervention and volatility and common arguments against intervention. Exchange rate regimes explain central bank beliefs about important aspects of intervention, including factors that lead to detection of secret interventions and the potential profitability of intervention. ; Earlier title: Authorities' beliefs about foreign exchange intervention: getting back under the hood

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Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2006-045.

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Date of creation: 2007
Date of revision:
Publication status: Published in Journal of International Money and Finance, February 2008, 27(1), pp. 1-25
Handle: RePEc:fip:fedlwp:2006-045
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  9. Sweeney, Richard J., 1997. "Do central banks lose on foreign-exchange intervention? A review article," Journal of Banking & Finance, Elsevier, vol. 21(11-12), pages 1667-1684, December.
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  24. Pasquariello, Paolo, 2002. "Uncertainty of trading rules in currency markets: an application of non-parametric bootstrapping," Journal of Multinational Financial Management, Elsevier, vol. 12(2), pages 107-133, April.
  25. Owen F. Humpage, 1996. "U.S. intervention: assessing the probability of success," Working Paper 9608, Federal Reserve Bank of Cleveland.
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  27. Stephen W. Salant, 1974. "Profitable speculation, price stability, and welfare," International Finance Discussion Papers 54, Board of Governors of the Federal Reserve System (U.S.).
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  29. Rasmus Fatum, 2002. "Post-Plaza intervention in the DEM/USD exchange rate," Canadian Journal of Economics, Canadian Economics Association, vol. 35(3), pages 556-567, August.
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