skip to main content
Resource type Show Results with: Show Results with: Index

Foreign Exchange Intervention; A Shield Against Appreciation Winds?

Tovar, Camilo

International Monetary Fund 2011

Link to full text

Citations Cited by
  • Title:
    Foreign Exchange Intervention; A Shield Against Appreciation Winds?
  • Author/Creator: Tovar, Camilo
  • Publisher: International Monetary Fund
  • Creation Date: 2011
  • Subjects: Exchange markets ; Exchange rates ; Central banks and their policies ; Central banks ; Latin America ; Foreign exchange ; Foreign exchange intervention ; Reserves ; sterilization ; exchange rate ; central bank
  • Description: 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.