## _sdn1409

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### EXECUTIVE SUMMARY — Context and background
- Summer 2013: surge in volatility after markets reassessed prospects that the U.S. Federal Reserve would wind down its bond-buying program and tighten monetary policy.
- Emerging markets (EMs) bore the brunt: asset prices and currencies tumbled; concerns about EM growth prospects intensified amid heightened uncertainty.
- Prolonged monetary easing in advanced economies (AEs) following the global financial crisis contributed to large capital flows into EMs during 2009–12.
- During 2009–12, EMs received close to half of global flows; inflows concentrated in eight to 10 large EMs and several small EMs relative to their size.
- Large inflows were in several cases accompanied by rapid credit expansion, fueling overheating and vulnerability buildups.
- A substantial part of the capital flows could not be explained by EMs’ economic fundamentals.

### EXECUTIVE SUMMARY — Observed market behavior during the summer of 2013
- Markets’ reaction to Fed discussions of unwinding unconventional monetary policy was unusual in both size and breadth of outflows.
- Initial phases of acute and systemic market volatility: asset prices and capital flows were hit indiscriminately across countries.
- Over time, responses became more differentiated across EMs.

### EXECUTIVE SUMMARY — Key findings
- (i) The Fed’s monetary policy announcements were strongly correlated with movements in asset prices and capital inflows in EMs, with the effects largest during the phase of unconventional monetary policy (post-2008) and when tapering was first discussed (summer of 2013).
- (ii) During initial periods of acute and systemic market volatility, asset prices and capital flows were hit indiscriminately across countries, but over time there was greater differentiation among EMs.
- (iii) Good macroeconomic fundamentals helped dampen market reactions to U.S. monetary policy shocks. Important factors: elevated current account deficits, high inflation, weak growth prospects, and relatively low reserves.
- (iv) Where vulnerabilities existed, EMs that acted early and decisively generally fared better.
- (v) Clear and effective communication by advanced-economy central banks concerning exit from unconventional monetary support is important to reduce the risk of excessive market volatility.
- (vi) The international community should cooperate to safeguard global financial stability: strengthen regional financial arrangements, enhance cross-border cooperation between central banks and regulators, and establish a stronger global financial safety net, including through adequate Fund resources.

### INTRODUCTION — Overview and principal takeaways
- May 2013: financial shock waves hit many EMs following Fed testimony raising the possibility of tapering.
- Key study findings reiterated: strong correlation of Fed announcements with EM asset prices and flows; largest effects during UMP phase and taper discussion; initial indiscriminate impact followed by differentiation; fundamentals and early policy action mattered; AE central bank communication and global cooperation important.

### A. Capital Flows into Emerging Markets — UMP, flows, composition, concentration, overflow
- U.S. Quantitative Easing (QE) and Fed balance sheet:
  - U.S. Quantitative Easing (QE) resulted in an approximate 750 percent increase in the size of the Fed balance sheet.
  - QE1: Fed decided to buy $600 billion in mortgage-backed securities (MBS) starting late November 2008.
  - QE2: Fed bought $600 billion of treasury securities beginning November 2010.
  - QE3: began mid-September 2012 with monthly purchases of $40 billion MBS and $85 billion of treasury and agency bonds starting December 2012.
- Shifts in capital flows and composition:
  - During 2010–13, EMs received close to half of all global flows (compared with less than 20 percent before).
  - Postcrisis portfolio flows grew to one in every four dollars entering EMs (portfolio role particularly pronounced for debt).
  - EM corporate bond issuance reached US$630 billion in 2013, or about 2½ percent of EM GDP, compared with only US$13 billion in early 2000.
  - The share of EM debt issued in local currency expanded from close to zero in 2000 to more than half the total by 2013.
- Drivers:
  - Over half of cumulative flows to EMs during 2008–12 were related to external factors (AEs’ weak growth, expansionary monetary policy, global search for yield).
  - External factors dominated inflows during 2008–11; domestic factors became increasingly important in 2011–12.
- Concentration:
  - Postcrisis, 90 percent of net capital flows to EMs (75 percent of gross capital flows) were received by eight countries: Brazil, China, India, Indonesia, Mexico, Peru, Poland, and Turkey.
  - These eight countries account for around 40 percent of the combined weights of all countries in the Emerging Markets Bond Index (EMBI).
- Overflow:
  - Model estimates suggest an “overflow” of about US$500 billion (amount in excess of what is explained by fundamentals).
  - Six large EMs (China, Brazil, Mexico, Turkey, Indonesia, and India) received 80 percent of the overflow.
- Bond flow surges and market depth:
  - Postcrisis, a larger share of EMs experienced a surge in bond flows.
  - Foreign holdings of local currency sovereign debt and nonfinancial corporate bond financing rose markedly.

### B. Policies and Conditions in the Run-up to May 2013
- Reserves and exchange rates:
  - Many EMs accumulated comfortable foreign exchange reserves; some built reserve positions beyond precautionary levels.
  - Eastern European countries were an exception, accumulating significant imbalances prior to 2008.
  - Most EMs allowed nominal exchange rate appreciation and accumulated reserves; foreign exchange intervention relative to inflows was more limited in 2010–12.
- Fiscal and monetary stance:
  - Fiscal and monetary policy was initially loosened in 2008–09; policies remained accommodative even as output gaps closed, fueling domestic demand, widening current account deficits, and eroding policy buffers in some countries.
- Growth and outlook:
  - Around 90 percent of the 25 largest EMs had growth in 2013 weaker than the average of 2003–07.
  - The IMF’s medium-term outlook for EMs was progressively marked down by more than a half percentage point per year between 2010 and 2013.

### MARKETS' REACTION TO TAPER TALK, MID-2013 — Nature and stylized facts
- Nature of the shock:
  - “Taper talk” (May–June 2013) revised expectations of future rate hikes and triggered sharp corrections in EMs: currency depreciations, higher external financing premia, equity declines, and slowing capital flows.
- Stylized facts:
  - Distinction: “signaling shocks” (information about short- to medium-term policy rate intentions) vs “market shocks” (term premia and long-term uncertainty).
  - During conventional policy (2000–Nov 2008) signaling and market shocks were roughly equal; during UMP phases, market shocks dominated.
  - Size of EM asset price and capital flow movements on U.S. policy announcement days were markedly higher during the taper talk phase, especially for bond yields and exchange rates.
  - Differentiation across countries widened over time: initial volatility was more indiscriminate but later focused on fundamentals.

### Explaining Market Reactions and Cross-Country Differentiation
- External amplifiers:
  - Higher VIX or lower growth in China amplified transmission of U.S. tapering shocks.
  - If China growth expectations during tapering had been as high as previous years, average EM equity response would have been 20 percent lower; bond yields would have responded 5 percent less.
- Role of fundamentals:
  - Countries with larger current account surpluses, stronger fiscal balances, lower inflation, higher GDP growth, lower share of local debt held by foreigners, and more reserves experienced smaller depreciation, smaller equity declines, and smaller bond-yield increases.
  - Deeper domestic financial markets reduced vulnerability over time (example: Mexico).
  - Tighter capital flow management measures and tighter macroprudential stances prior to volatile episodes were associated with more muted market reactions.
- Signaling vs market shocks:
  - Signaling shocks induced greater differentiation across countries; market shocks affected countries more uniformly.

### B. Emerging Market Policy Responses and Their Effectiveness
- Policy tools deployed:
  - Monetary policy (most commonly used; many countries raised rates: Brazil, India, Indonesia, Russia, South Africa, Turkey).
  - Liquidity provision measures.
  - Macroprudential policies.
  - Capital flow management measures (CFMs).
  - Foreign exchange intervention.
  - Fiscal policy (used least).
- Effectiveness (event analysis for 12 EMs most hit in May–Aug 2013: Brazil, Colombia, India, Indonesia, Malaysia, Mexico, Peru, Poland, Russia, South Africa, Thailand, Turkey):
  - Many policy actions were broadly effective in dampening asset price changes.
  - Liquidity provision measures dampened the pace of FX depreciation and the rise in bond yields but did not slow equity price declines.
  - Interest rate hikes, removal/tightening of CFMs on inflows, and macroprudential policies slowed depreciation, equity falls, and bond-yield rises.
  - Fiscal policy announcements showed no statistically significant short-run calming effect.
- Foreign exchange intervention (analysis for Chile, Colombia, Costa Rica, Mexico, Peru, Turkey):
  - Intervention can slow pace of depreciation when:
    - Inflation is low;
    - Currency is not overvalued (REER not overvalued);
    - Reserves are adequate.
  - If reserves are not adequate, FX selling can be destabilizing and may speed depreciation.
  - Effectiveness depends on global uncertainty: when the VIX is above the 75th percentile, the smoothing effect of intervention stops being statistically significant.

### Lessons Going Forward and Policy Implications
- Transition risks:
  - Global financial system remains far from normal; spikes in volatility can be costly domestically and internationally.
  - A resurgence of portfolio flows since April 2014 pushed asset prices near historically high levels; corporate credit spreads in Brazil and China narrowed around 70 basis points from June 2013 to June 2014 even as profitability and coverage ratios declined and leverage rose—raising risk of abrupt unwinds.
- Country-level priorities:
  - Address weaknesses in macroeconomic fundamentals through coherent and credible macro policies and frameworks.
  - Monetary tightening is necessary where inflation is high and credibility must be maintained.
  - Targeted FX intervention can reduce volatility where reserves are adequate.
  - Early and decisive policy action by vulnerable EMs was rewarded by markets (examples: India and Indonesia improved current accounts and saw more stable currencies in early 2014).
- Role of advanced economies and global cooperation:
  - AE central banks should provide clear communication and adequate market guidance to minimize excess volatility in longer-term rates during exit from exceptional policies.
  - Assess and enhance the global financial safety net:
    - Options include supporting central bank swap lines, cooperating with regional financial arrangements (e.g., ASEAN+3 CMII completion noted), developing new IMF facilities, and greater use of IMF precautionary arrangements.
    - An enhanced global financial safety net financed by source and recipient countries could reduce incentives for uncooperative policies and fragmentation of the global financial system.
- Communication effectiveness (U.S. experience):
  - Fed communications evolved since 2008: qualitative time-dependent forward guidance → calendar-based guidance → state-dependent guidance with thresholds on unemployment conditional on inflation, complemented by LSAPs.
  - Sensitivity of expected short-term rates to news varied across forward-guidance regimes and surprises (evidence shown for two-year-ahead expected Fed funds rates and news surprise index).

*Source: IMF Staff Discussion Note — INTRODUCTION (sdn1409).*

### EXECUTIVE SUMMARY ___________________________________________________________________________ 4

### EXECUTIVE SUMMARY

### Context and background
- A surge in volatility overtook global financial markets in the summer of 2013 following markets’ reassessment of prospects that the U.S. Federal Reserve would wind down its bond-buying program and tighten monetary policy.
- The brunt was felt acutely by emerging markets (EMs): asset prices and currencies tumbled, and concerns about EM growth prospects intensified amid heightened uncertainty.
- The shift in market sentiment vis-à-vis EMs followed a prolonged period of monetary easing in advanced economies, which was essential for preventing an even worse outcome at the start of the global financial crisis.
- During 2009–12, EMs received close to half of global flows; inflows were concentrated in eight to 10 large EMs, and several small EMs also attracted large volumes relative to their size.
- In several cases, large inflows were accompanied by rapid credit expansion, fueling overheating and setting the conditions for a buildup of vulnerabilities, challenging policymaking in EMs.
- A substantial part of the capital flows could not be explained by EMs’ economic fundamentals.

### Observed market behavior during the summer of 2013
- The markets’ reaction to Fed discussions of unwinding unconventional monetary policy was unusual in both size and breadth of outflows, with adjustment magnitude varying significantly across countries.
- During initial periods of acute and systemic market volatility, asset prices and capital flows were hit indiscriminately across countries; over time, responses became more differentiated across EMs.

### Key findings
- (i) The Fed’s monetary policy announcements were strongly correlated with movements in asset prices and capital inflows in EMs, with the effects being largest during the phase of unconventional monetary policy (post-2008) and when tapering was first discussed (summer of 2013).
- (ii) During initial periods of acute and systemic market volatility, asset prices and capital flows were hit indiscriminately across countries, but over time there was greater differentiation among EMs.
- (iii) Good macroeconomic fundamentals helped dampen market reactions to U.S. monetary policy shocks. In particular, elevated current account deficits, high inflation, weak growth prospects, and relatively low reserves were important factors affecting market reaction.
- (iv) Where vulnerabilities existed, emerging markets that acted early and decisively generally fared better.
- (v) Clear and effective communication by advanced-economy central banks concerning exit from unconventional monetary support is important to reduce the risk of excessive market volatility.
- (vi) The international community has an important role to play to safeguard global financial stability. This includes determined efforts by all countries to cooperate with regional financial arrangements, enhance cross-border cooperation between central banks and regulators, and establish stronger global financial safety net, including through adequate Fund resources.

*IMF STAFF DISCUSSION NOTE — EXECUTIVE SUMMARY*

### INTRODUCTION

### _sdn1409 - INTRODUCTION

### Overview
- In May 2013, financial shock waves hit many emerging markets (EMs) following testimony by the chairman of the U.S. Federal Reserve that raised the possibility of tapering purchase of treasury and agency bonds.
- Key study findings:
  - The Fed’s monetary policy announcements were correlated with movements in asset prices and capital inflows in EMs.
  - The effects were greatest during the UMP phase (post-2008) and especially during the period when tapering was first discussed (summer of 2013).
  - During initial periods of acute and systemic market volatility, asset prices and capital flows were hit more indiscriminately across countries; over time there was greater differentiation among EMs.
  - Good macroeconomic fundamentals in EMs helped dampen market reactions to U.S. monetary policy shocks.
  - Where vulnerabilities existed, EMs that acted early and decisively generally fared better.
  - Clear and effective communication by AE central banks concerning exit from unconventional monetary support is important to reduce the risk of excessive market volatility.
  - Enhanced global cooperation, including a strong global financial safety net, may offer EMs effective protection during the transition away from large-scale liquidity support.

### A. Capital Flows into Emerging Markets
- Unconventional monetary policies (UMP) in AEs after the 2008 crisis included asset purchases; U.S. Quantitative Easing (QE) resulted in an approximate 750 percent increase in the size of the Fed balance sheet.
  - QE1: Fed decided to buy $600 billion in mortgage-backed securities (MBS) starting late November 2008.
  - QE2: Fed bought $600 billion of treasury securities beginning November 2010.
  - QE3: began mid-September 2012 with monthly purchases of $40 billion MBS and $85 billion of treasury and agency bonds starting December 2012.
- Shifts in capital flows and composition:
  - During 2010–13, EMs received close to half of all global flows (compared with less than 20 percent before).
  - Portfolio flows, particularly debt, played an increasingly important role; postcrisis portfolio flows grew to one in every four dollars entering EMs (excluding China effect even more pronounced).
  - EM corporate bond issuance reached US$630 billion in 2013, or about 2½ percent of EM GDP, compared with only US$13 billion in early 2000.
  - The share of EM debt issued in local currency expanded from close to zero in 2000 to more than half the total by 2013.

### Drivers, Concentration, and “Overflow”
- External vs domestic drivers:
  - Over half of cumulative flows to EMs during 2008–12 were related to external factors (including AEs’ weak growth, expansionary monetary policy, and a global search for yield).
  - External factors drove inflows during 2008–11; domestic factors became increasingly important in 2011–12.
- Concentration:
  - Postcrisis, 90 percent of net capital flows to EMs (75 percent of gross capital flows) were received by eight countries: Brazil, China, India, Indonesia, Mexico, Peru, Poland, and Turkey.
  - These eight countries account for around 40 percent of the combined weights of all countries in the Emerging Markets Bond Index (EMBI).
- Overflow:
  - Model estimates suggest an “overflow” of about US$500 billion (amount in excess of what is explained by fundamentals).
  - Six large EMs (China, Brazil, Mexico, Turkey, Indonesia, and India) received 80 percent of the overflow.
- Bond flow surges and market depth:
  - Postcrisis, a larger share of EMs experienced a surge in bond flows.
  - Foreign holdings of local currency sovereign debt and nonfinancial corporate bond financing rose markedly.

### B. Policies and Conditions in the Run-up to May 2013
- Policy buffers and reserve accumulation:
  - Many EMs accumulated comfortable foreign exchange reserves; some built reserve positions beyond precautionary levels.
  - Eastern European countries had been an exception, accumulating significant imbalances prior to 2008.
  - Most EMs met inflows by allowing nominal exchange rate appreciation and by accumulating reserves, though foreign exchange intervention relative to inflows was more limited in 2010–12.
- Fiscal and monetary stance:
  - Fiscal and monetary policy was initially loosened in 2008–09; macroeconomic policies remained accommodative even as output gaps closed.
  - This fueled domestic demand, widened current account deficits, and eroded policy buffers in some countries.
- Growth and outlook:
  - Around 90 percent of the 25 largest EMs had growth in 2013 weaker than the average of 2003–07.
  - The IMF’s medium-term outlook for EMs was progressively marked down by more than a half percentage point per year between 2010 and 2013.

### MARKETS' REACTION TO TAPER TALK, MID-2013
- Nature of the shock:
  - “Taper talk” (May–June 2013) led markets to revise expectations of future rate hikes and triggered sharp market corrections in EMs: currency depreciations, higher external financing premia, equity declines, and slowing capital flows.
- Stylized facts:
  - Distinction between “signaling shocks” (information about short- to medium-term policy rate intentions) and “market shocks” (term premia and long-term uncertainty).
  - During conventional policy (2000–Nov 2008) signaling and market shocks were roughly equal; during UMP phases, market shocks dominated, notably during the taper talk phase where U.S. monetary policy shocks were mostly perceived as market shocks.
  - Size of EM asset price and capital flow movements on U.S. policy announcement days were markedly higher during the taper talk phase, especially for bond yields and exchange rates.
  - Differentiation across countries widened over time; initial volatility was more indiscriminate but later focused on fundamentals.

### Explaining Market Reactions and Cross-Country Differentiation
- Amplifiers and cushions:
  - External conditions amplified transmission: higher VIX or lower growth in China amplified effects of U.S. tapering shocks.
  - If China growth expectations during tapering had been as high as previous years, average EM equity response would have been 20 percent lower; bond yields would have responded 5 percent less.
- Fundamentals mattered over time:
  - Countries with larger current account surpluses, stronger fiscal balances, lower inflation, higher GDP growth, lower share of local debt held by foreigners, and more reserves experienced smaller depreciation, smaller equity declines, and smaller bond-yield increases.
  - Countries with deeper domestic financial markets were less affected over time (e.g., Mexico’s deep markets facilitated adjustment despite initial depreciation).
  - Tighter capital flow management measures and tighter macroprudential stances prior to volatile episodes were associated with more muted market reactions.
- Signaling vs market shocks:
  - Signaling shocks induced greater differentiation across countries; market shocks affected countries more uniformly.

### B. Emerging Market Policy Responses and Their Effectiveness
- Policy tools deployed included:
  - Monetary policy (most commonly used; many countries raised rates: Brazil, India, Indonesia, Russia, South Africa, Turkey).
  - Liquidity provision measures (to preserve orderly market conditions).
  - Macroprudential policies.
  - Capital flow management measures (CFMs).
  - Foreign exchange intervention.
  - Fiscal policy (used least).
- Effectiveness (event analysis for 12 EMs most hit in May–Aug 2013: Brazil, Colombia, India, Indonesia, Malaysia, Mexico, Peru, Poland, Russia, South Africa, Thailand, Turkey):
  - Many policy actions were broadly effective in dampening asset price changes.
  - Liquidity provision measures dampened the pace of FX depreciation and the rise in bond yields but did not slow equity price declines.
  - Interest rate hikes, removal/tightening of CFMs on inflows, and macroprudential policies slowed depreciation, equity falls, and bond-yield rises.
  - Fiscal policy announcements showed no statistically significant short-run calming effect.
- Foreign exchange intervention:
  - Analysis for six EMs with published intervention data (Chile, Colombia, Costa Rica, Mexico, Peru, Turkey) indicates intervention can slow pace of depreciation when:
    - Inflation is low;
    - Currency is not overvalued (REER not overvalued);
    - Reserves are adequate.
  - If reserves are not adequate, FX selling can be destabilizing and may speed depreciation.
  - Effectiveness depends on global uncertainty: when the VIX is above the 75th percentile, the smoothing effect of intervention stops being statistically significant (i.e., intervention provides little or no help during market panic).

### Lessons Going Forward and Policy Implications
- Transition risks:
  - The global financial system remains far from normal; spikes in volatility (e.g., May 2013 taper talk) can be costly domestically and internationally.
  - A resurgence of portfolio flows since April 2014 pushed asset prices near historically high levels; corporate credit spreads in Brazil and China narrowed around 70 basis points from June 2013 to June 2014 even as profitability and coverage ratios declined and leverage rose—raising risk of abrupt unwinds.
- Country-level priorities:
  - Address weaknesses in macroeconomic fundamentals through coherent and credible macro policies and frameworks.
  - Monetary tightening is necessary where inflation is high and credibility must be maintained.
  - Targeted FX intervention can reduce volatility where reserves are adequate.
  - Early and decisive policy action by vulnerable EMs was rewarded by markets (e.g., India and Indonesia improved current accounts and saw more stable currencies in early 2014).
- Role of advanced economies and global cooperation:
  - AE central banks should provide clear communication and adequate market guidance to minimize excess volatility in longer-term rates during exit from exceptional policies.
  - Assess and enhance the global financial safety net to support countries during monetary policy normalization:
    - Options include supporting central bank swap lines, cooperating with regional financial arrangements (e.g., ASEAN+3 CMII completion noted), developing new IMF facilities, and greater use of IMF precautionary arrangements.
    - An enhanced global financial safety net financed by source and recipient countries could reduce incentives for uncooperative policies and fragmentation of the global financial system.
- Communication effectiveness (U.S. experience):
  - U.S. Fed communications evolved since 2008: qualitative time-dependent forward guidance → calendar-based guidance → state-dependent guidance with thresholds on unemployment conditional on inflation, complemented by LSAPs.
  - Sensitivity of expected short-term rates to news varied across different forward-guidance regimes and surprises (evidence shown for two-year-ahead expected Fed funds rates and news surprise index).

*Source: IMF Staff Discussion Note — INTRODUCTION (sdn1409).*

### REFERENCES

### _sdn1409 - REFERENCES

### References

- Adler, Gustavo, and Camilo Tovar, “Foreign Exchange Intervention: A Shield Against Appreciation  
 Winds?” IMF Working Paper 11/165 (Washington: International Monetary Fund).  
- Ahmed, Shaghil, and Andrei Zlate, 2013, “Capital Flows to Emerging Market Economies: A Brave New  
 World?” International Finance Discussion Papers, Board of Governors of the Federal Reserve  
 System, Number 1081.  
- Bi, Ran, Silvia Sgherri, and Papa N’Diaye, 2014, “Policy Responses to the May 2013 Market Jitters: 
What Worked and What Did Not Work?” IMF Working Paper, Forthcoming.  
- Bowman David, Juan M. Londono, and Horacio Sapriza, 2014, ”U.S. Unconventional Monetary Policy 
and Transmission to Emerging Market Economies,” International Finance Discussion Papers, 
No. 1109, Board of Governors of the Federal Reserve System.  
- Chen, Jiaqan, Tommaso Mancini-Griffoli, and Ratna Sahay, 2014, 
“Spillovers from U.S. Monetary 
Policy on Emerging Markets: Different this Time?” IMF Working Paper, forthcoming.  
- Cubeddu, L., A. Culiuc, Ghada Fayad, Yuan Gao, Kalpana Kochhar, Ayhan Kyobe, Ceyda Oner, 
Roberto Perrelli, Sarah Sanya, Evridiki Tsounta, and Zhongxia Zhang, 2014, “Emerging 
Markets in Transition: Growth Prospects and Challenges,” Staff Discussion Note 14/6 
(Washington: International Monetary Fund). 
- Dominguez, Kathryn, 2003, “The Market Microstructure of Central Bank Intervention,” Journal of  
International Economics, Vol. 59, 25-45.  
- Ghosh, Atish R., Jun Kim, Mahvash S. Qureshi, and Juan Zalduendo, 2012, “Surges,” IMF Working  
 Paper12/22 (Washington: International Monetary Fund). 
- International Monetary, Fund (IMF), 2013a, “Unconventional Monetary Policies––Recent Experience 
and Prospects,” April 18.  http://www.imf.org/external/np/pp/eng/2013/041813a.pdf
. 
- International Monetary, Fund (IMF), 2013b, “Assessing Reserves Adequacy—Further Considerations,” 
IMF Policy Paper, 13 November. http://www.imf.org/external/np/pp/eng/2013/111313d.pdf. 
- International Monetary, Fund (IMF), 2014, “IMF 2014 Spillover Report,” July 29.  
http://www.imf.org/external/np/pp/eng/2014/062514.pdf
. 
- Kohlscheen, Emanuel, and Sandro C. Andrade, 2013, “Official Interventions through Derivatives:  
 Affecting the Demand for Foreign Exchange,” Banco Central do Brazil Working Paper 317. 
- Mishra, Prachi, Kenji Moriyama, Papa N’Diaye, and Lam Nguyen, 2014, “Impact of Fed Tapering  
Announcements on Emerging Markets,” IMF Working Paper 14/109 (Washington: 
International Monetary Fund). 
- Ostry, Jonathan D., Atish R. Ghosh, and Marcos Chamon, 2012, “Two Targets, Two Instruments:  
 Monetary and Exchange Rate Policies in Emerging Market Economies,” IMF Staff 
Discussion  Note 12/01 (Washington: International Monetary Fund). 
- Sarno, Lucio, and Mark Taylor, 2001, “Official Intervention in the Foreign Exchange Market: Is it  
 Effective and, If So, How Does It Work?” Journal of Economic Literature Vol. 39, 
 pp. 839-68.

*Source: _sdn1409 - REFERENCES*

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