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When is foreign exchange intervention effective? Evidence from 33 countries

Marcel Fratzscher (), Oliver Gloede (), Lukas Menkhoff, Lucio Sarno () and St�hr, Tobias

No 12510, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper examines foreign exchange intervention based on novel daily data covering 33 countries from 1995 to 2011. We find that intervention is widely used and an effective policy tool, with a success rate in excess of 80 percent under some criteria. The policy works well in terms of smoothing the path of exchange rates, and in stabilizing the exchange rate in countries with narrow band regimes. Moving the level of the exchange rate in flexible regimes requires that some conditions are met, including the use of large volumes and that intervention is made public and supported via communication.

Keywords: Foreign exchange intervention; exchange rate regimes; effectiveness measures; communication. (search for similar items in EconPapers)
JEL-codes: E58 F31 F33 (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mac, nep-mon and nep-opm
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Related works:
Journal Article: When Is Foreign Exchange Intervention Effective? Evidence from 33 Countries (2019) Downloads
Working Paper: When Is Foreign Exchange Intervention Effective? Evidence from 33 Countries (2015) Downloads
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