When is Foreign Exchange Intervention Effective? Evidence from 33 Countries

Fratzscher, M., Gloede, O., Menkhoff, L., Sarno, L. & Stoehr, T. (2017). When is Foreign Exchange Intervention Effective? Evidence from 33 Countries. American Economic Journal: Macroeconomics,

Text - Accepted Version
Download (305kB) | Preview


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.

Item Type: Article
Additional Information: Copyright © 2018 AEA. This is the accepted manuscript version of an article to be published in American Economic Journal: Macroeconomics. Permission to make digital or hard copies of part or all of American Economic Association publications for personal or classroom use is granted without fee provided that copies are not distributed for profit or direct commercial advantage and that copies show this notice on the first page or initial screen of a display along with the full citation, including the name of the author. Copyrights for components of this work owned by others than AEA must be honored. Abstracting with credit is permitted.
Divisions: Cass Business School > Faculty of Finance
URI: http://openaccess.city.ac.uk/id/eprint/19099

Actions (login required)

View Item View Item


Downloads per month over past year

View more statistics