Central Bank Views on Foreign Exchange Intervention

20 Pages Posted: 6 Oct 2014

See all articles by Madhusudan S. Mohanty

Madhusudan S. Mohanty

Bank for International Settlements (BIS) - Monetary and Economic Department

Bat-el Berger

Bank for International Settlements (BIS)

Date Written: October 2013

Abstract

This note reviews central banks’ views on the objectives, methods and effectiveness of foreign exchange intervention, according to their responses to a survey questionnaire. Due to the recent global financial crisis, objectives have shifted to focus more on curbing capital flows and exchange rate volatility. Central banks prefer less transparent intervention practices, which they time by monitoring the most liquid segments of the market. Interventions are often perceived as being successful in achieving the desired objective. Combining intervention with macroprudential and capital control measures may have contributed to recent successes. Besides analysing these and more findings of this year’s meeting, this paper compares them to the results of the last survey from 2004.

Full publication: Market Volatility and Foreign Exchange Intervention in EMEs: What Has Changed?

Keywords: FX intervention, exchange rate volatility, monetary policy

JEL Classification: F31, E58, E52

Suggested Citation

Mohanty, Madhusudan S. and Berger, Bat-el, Central Bank Views on Foreign Exchange Intervention (October 2013). BIS Paper No. 73e, Available at SSRN: https://ssrn.com/abstract=2497135

Madhusudan S. Mohanty (Contact Author)

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Bat-el Berger

Bank for International Settlements (BIS)

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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