Foreign Exchange Intervention in Emerging Market Economies: Lessons, Issues and Implications for Central Banks

7 Pages Posted: 6 Oct 2014

Date Written: October 2013

Abstract

In the wake of the Lehman crisis, intervention in the foreign exchange market has been a topic of increasing relevance in central banking, particularly for small and medium open economies like Argentina. This has implied a change in focus to deal with some problems arising from the combination of the international financial crisis and the monetary policies implemented by developed countries. Therefore, the policies implemented by EMEs to cope with the crisis have included direct central bank intervention in the foreign exchange market, either in the spot or in the forward market, the build-up of international reserves, the adoption of administered floating exchange rate regimes and the regulation of capital inflows and outflows. Argentina followed those policy guidelines well before the crisis erupted, allowing it to reduce nominal exchange rate volatility and maintaining monetary stability.

Full publication: Market Volatility and Foreign Exchange Intervention in EMEs: What Has Changed?

Keywords: central banks and their policies, foreign exchange, current account adjustment, short-term capital movements

JEL Classification: E58, F31, F32

Suggested Citation

Pesce, Miguel Angel, Foreign Exchange Intervention in Emerging Market Economies: Lessons, Issues and Implications for Central Banks (October 2013). BIS Paper No. 73zb. Available at SSRN: https://ssrn.com/abstract=2474013

Miguel Angel Pesce (Contact Author)

Central Bank of Argentina

Reconquista 266
Edificio Central, piso 7
Buenos Aires, 1003
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
23
Abstract Views
259
PlumX Metrics