Foreign Exchange Intervention : A Shield Against Appreciation Winds? / Gustavo Adler, Camilo Tovar Mora.

Format:

Book

Government document

Author/Creator:

Adler, Gustavo.

International Monetary Fund, Corporate Author.

Contributor:

Tovar Mora, Camilo.

Series:

IMF Working Papers; Working Paper ; No. 2011/165

IMF Working Papers

Language:

English

Subjects (All):

Foreign exchange rates--Latin America.

Foreign exchange rates.

Foreign exchange administration.

Physical Description:

1 online resource (73 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2011.

Language Note:

English

Summary:

This paper examines foreign exchange intervention practices and their effectiveness using a new qualitative and quantitative database for a panel of 15 economies covering 2004 - 10, with special focus on Latin America. Qualitatively, it examines institutional aspects such as declared motives, instruments employed, the use of rules versus discretion, and the degree of transparency. Quantitatively, it assesses the effectiveness of sterilized interventions in influencing the exchange rate using a two-stage IV-panel data approach to overcome endogeneity bias. Results suggest that interventions slow the pace of appreciation, but the effects decrease rapidly with the degree of capital account openness. At the same time, interventions are more effective in the context of already ?overvalued' exchange rates.

Contents:

Cover Page; Title Page; Copyright Page; Contents; Tables; Figures; 1. Global Conditions and Change in International Reserves-Selected EM/AM Economies; 2. Intervention and Bilateral Exchange Rate in Latin America; 3. Motives for Intervention; A. Frequency and Size of Interventions; 1. Stylized Facts of Foreign Exchange Purchases; B. Declared Intervention Practices; 4. Framework for Intervention; 5. How Do Latin American Countries Actually Intervene?; 6. Instruments of Intervention; 7. Daily Foreign Exchange Market Turnover?; 8. When Are Amounts of Intervention Published?

A. Estimation Strategy9. US Trade-Weighted Exchange Rate and Flows to EME Asset Funds; 10. Intervention and Exchange Rates around Identified Episodes; B. Data Issues; 11. Actual Intervention data vs. International Reserves; 2. Effectiveness of Intervention; A. First Stage: Reaction Functions; 12. Coefficients of Intervention Reaction Functions; B. Second stage: Effects of Intervention; 13. Unveiling the Effect of FX Intervention-Results of Panel Approach under Different Specifications; 3. Factors Affecting the Effectiveness of Intervention; References

Annex 3. FXI Rules in Practice: Some Latin American ExamplesAnnex 2. Instruments for Foreign Exchange Purchases; Annex 1. Foreign Exchange Intervention and International Reserves: Data Availability; V. Conclusions; IV. Results; III. The Effects of Foreign Exchange Intervention; II. The Extent and Modalities of Intervention; I. Introduction; Footnotes

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on online resource; title from PDF title page (ebrary, viewed September 26, 2014).

ISBN:

9786613868749

9781462355679

1462355676

9781462318346

1462318347

9781283556293

1283556294

9781462302215

1462302211