A study on the mechanism of speculative attack and the defence strategy of the central bank

Chang-Hyun Yun
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Chang-Hyun Yun: Myongji University

East Asian Economic Review, 1999, vol. 3, issue 3, 43-69

Abstract: We first analyze the concrete mechanism of speculative attack on the foreign exchange market which became very prevalent phenomena during the foreign exchange crisis. When the central bank of the domestic country tries to defend the attack by increasing the interest rate, some problems can arise in that the speculative attacks through foreign exchange options market and/or index futures markets can be very successful due to that policy. So the central bank should pay much attention to the microstructure of the financial markets when the defence strategy against speculative attack is determined.

Keywords: International Financial Market; Financial Crisis; Central Bank; Korea (search for similar items in EconPapers)
JEL-codes: F31 F32 F33 (search for similar items in EconPapers)
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:ris:eaerev:0273

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