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An assessment of some open issues in the analysis of foreign exchange intervention
Author(s) -
Vitale Paolo
Publication year - 2007
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.327
Subject(s) - intervention (counseling) , foreign exchange market , secrecy , foreign exchange , currency , relevance (law) , perspective (graphical) , economics , portfolio , balance (ability) , identification (biology) , financial economics , macroeconomics , monetary economics , political science , psychology , computer science , botany , artificial intelligence , psychiatry , neuroscience , biology , law
We discuss some fundamental aspects of the study of foreign exchange intervention. In particular, we analyse some unresolved issues, such as the secrecy puzzle, the relevance of the signalling and portfolio‐balance effect hypotheses, the identification of the impact of foreign exchange intervention on currency values. We argue that: (i) the unresolved nature of these issues is partly due to the absence of a market microstructure perspective in most of the existing analysis of foreign exchange intervention; and (ii) that recent promising advances in this strand of research have not fully exploited the potential of such perspective. Copyright © 2007 John Wiley & Sons, Ltd.