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The Influence of Actual and Unrequited Interventions

Kathryn Dominguez and Freyan Panthaki

No 12953, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Intervention operations are used by governments to manage their exchange rates but officials rarely confirm their presence in the market, leading inevitably to erroneous reports in the financial press. There are also reports of what we term, unrequited interventions, interventions that the market expects but do not materialize. In this paper we examine the effects of various types of intervention news on intra-day exchange rate behavior. We find that unrequited interventions have a statistically significant influence on returns, volatility and order flow, suggesting that the expectation of intervention, even when governments do not intervene, can affect currency values.

JEL-codes: F3 F31 G14 G15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mon and nep-mst
Date: 2007-03
Note: IFM
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Published as International Journal of Finance and Economics, 12, 2007, 171-200.

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Journal Article: The influence of actual and unrequited interventions (2007) Downloads
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