Foreign Exchange Market Trading Volume and Federal Reserve Intervention | Zendy

Alain Chaboud | Zendy; Blake LeBaron | Zendy

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Foreign Exchange Market Trading Volume and Federal Reserve Intervention

Author(s) -

Alain Chaboud,

Blake LeBaron

Publication year - 1999

Publication title -

ssrn electronic journal

Language(s) - English

Resource type - Journals

ISSN - 1556-5068

DOI - 10.2139/ssrn.177148

Subject(s) - foreign exchange market , business , foreign exchange , volume (thermodynamics) , intervention (counseling) , monetary economics , algorithmic trading , open market operation , financial system , international economics , economics , finance , monetary policy , medicine , physics , quantum mechanics , psychiatry

We find a large positive correlation between daily trading volume in currency futures markets and foreign exchange intervention by the Federal Reserve over the period 1979-1996. Neither contemporaneous nor predicted volatility can fully account for the increases in trading activity. Whether or not the intervention operation is publicly reported appears to be an important determinant of trading volume.

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