Motives and Effectiveness of Forex Interventions: Evidence from Peru

32 Pages Posted: 6 Feb 2015

Date Written: December 2014


This paper assesses empirically the motives and effectiveness of forex interventions in Peru. While the central bank of Peru states that its forex interventions aim only at containing excessive exchange rate volatility, the results of this paper show that, in practice, the interventions seem to have aimed at “leaning against the wind” as well. The results also show that forex sales, but not forex purchases, react to volatility, indicating asymmetry in the central bank’s reactions to episodes of appreciation and depreciation pressures. Similarly, the paper documents evidence of asymmetry in the effectiveness of forex interventions.

Keywords: Foreign exchange intervention, Peru, Exchange rates, Foreign exchange reserves, Capital flows, FX intervention, FX purchase, FX sale, FX volatility, central bank, portfolio, capital inflows, market, financial system, interest, spot market, interest rates, transactions, investment, trading, share, monetary fund, exchange rate movements, capital outflows, fund managers, pension fund, fiscal policies, macroeconomic risks, instruments, push factors, financial crisis, reserve bank, emerging economies, foreign direct investment, derivatives market, stock, portfolio inflows, credit growth, asset price, issuance, bond issuance, options, financial flows, securities, real exchange rate, swaps

Suggested Citation

Tashu, Melesse Minale, Motives and Effectiveness of Forex Interventions: Evidence from Peru (December 2014). IMF Working Paper No. 14/217, Available at SSRN:

Melesse Minale Tashu (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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