Dread of Depreciation: Measuring Real Exchange Rate Interventions

Author/Editor:

Jayasri Dutta

Publication Date:

April 1, 2002

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

We specify an empirical framework to detect the effects of official intervention on real exchange rate dynamics. Using data for 27 advanced and emerging market economies, we find evidence that interventions are a near-universal practice; almost all countries intervene when real exchange rates depreciate; interventions reduce the degree of persistence in real exchange rates; and the defense of an overvalued currency tends to be contractionary.

Series:

Working Paper No. 2002/063

Subject:

English

Publication Date:

April 1, 2002

ISBN/ISSN:

9781451848434/1018-5941

Stock No:

WPIEA0632002

Pages:

36

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