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Foreign Exchange Intervention in Emerging Markets: A Survey of Empirical Studies
Author(s) -
Menkhoff Lukas
Publication year - 2013
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12027
Subject(s) - emerging markets , psychological intervention , leverage (statistics) , volatility (finance) , economics , foreign exchange , monetary economics , central bank , capital market , sterilization (economics) , intervention (counseling) , capital flows , foreign exchange market , international economics , business , macroeconomics , monetary policy , financial economics , market economy , finance , medicine , liberalization , psychiatry , machine learning , computer science
Nowadays foreign exchange interventions occur in emerging market economies, whereas empirical studies on interventions mainly refer to advanced economies. However, interventions in emerging markets are different from those in advanced economies: they occur ‘regularly’ and central banks have considerable leverage, derived from relatively high reserves, some non‐sterilisation, the central bank’s information advantage and capital controls. Consequently, these interventions often successfully impact the level and volatility of exchange rates. Nevertheless, more research on interventions in emerging markets is needed analysing the influence of heterogeneous institutional circumstances, examining the role of central bank communication and using high‐frequency data.