Motives and Effectiveness of Forex Interventions : Evidence from Peru

Author/Editor:

Melesse Tashu

Publication Date:

December 12, 2014

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:

This paper assesses empirically the motives and effectiveness of forex interventions in Peru. While the central bank of Peru states that its forex interventions aim only at containing excessive exchange rate volatility, the results of this paper show that, in practice, the interventions seem to have aimed at “leaning against the wind” as well. The results also show that forex sales, but not forex purchases, react to volatility, indicating asymmetry in the central bank’s reactions to episodes of appreciation and depreciation pressures. Similarly, the paper documents evidence of asymmetry in the effectiveness of forex interventions.

Series:

Working Paper No. 14/217

Subject:

English

Publication Date:

December 12, 2014

ISBN/ISSN:

9781484340189/1018-5941

Stock No:

WPIEA2014217

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

31

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