Does foreign exchange intervention signal future monetary policy?
Graciela Kaminsky () and
Karen K. Lewis
No 96-7, Working Papers from Federal Reserve Bank of Philadelphia
A frequently cited explanation for why foreign exchange interventions affect the exchange rate is that these interventions signal future monetary policy intentions. This explanation says that central banks signal a more contractionary monetary policy in the future by buying domestic currency today. Therefore, the expectations of future tighter monetary policy make the domestic currency appreciate, even though the current monetary effects of the intervention are typically offset by central banks. Of course, this explanation presumes that central banks, in fact, back up interventions with subsequent changes in monetary policy. In this paper, the authors empirically examine this presumption.
Keywords: Foreign exchange - Law and legislation; Monetary policy (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (112) Track citations by RSS feed
Downloads: (external link)
http://www.philadelphiafed.org/research-and-data/p ... pers/1996/wp96-7.pdf (application/pdf)
Journal Article: Does foreign exchange intervention signal future monetary policy? (1996)
Working Paper: Does foreign exchange intervention signal future monetary policy? (1993)
Working Paper: Does Foreign Exchange Intervention Signal Future Monetary Policy? (1993)
Working Paper: Does Foreign Exchange Intervention Signal Future Monetary Policy? (1992)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedpwp:96-7
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Working Papers from Federal Reserve Bank of Philadelphia Contact information at EDIRC.
Bibliographic data for series maintained by Beth Paul ().