## Unveiling the Effects of Foreign Exchange Intervention: A Panel Approach

_IMF Working Papers, June 23, 2015_

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## Bibliographic details
- Authors: Gustavo Adler, Noemie Lisack, Rui Mano
- Published: June 23, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513514864.001

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### Summary of findings
- The paper uses an instrumental-variables panel approach to study the effect of foreign exchange intervention on the exchange rate.
- Intervention affects the level of the exchange rate in an economically meaningful way.
- A purchase of foreign currency of 1 percentage point of GDP causes:
  - a depreciation of the nominal exchange rate in the range of [1.7-2.0] percent.
  - a depreciation of the real exchange rate in the range of [1.4-1.7] percent.
- The effects are found to be quite persistent.

### Methods and scope
- Empirical approach: instrumental-variables panel estimation.
- Explored dimensions:
  - possible asymmetric effects of intervention.
  - whether effectiveness depends on the depth of domestic financial markets.

### Key statistics and publication identifiers
- Pages: 42
- Volume: 2015
- Issue: 130
- Series: Working Paper No. 2015/130
- DOI: https://doi.org/10.5089/9781513514864.001
- ISBN: 9781513514864
- ISSN: 1018-5941

### Policy-relevant implications (as presented)
- Foreign exchange intervention can be an effective tool to influence nominal and real exchange rates in economically meaningful magnitudes when interventions are sizable relative to GDP.
- Effectiveness and persistence suggest interventions may have longer-lasting impacts, with potential variation depending on market depth and asymmetries (topics explored in the paper).

*Unveiling the Effects of Foreign Exchange Intervention: A Panel Approach — Gustavo Adler, Noemie Lisack, Rui Mano, June 23, 2015.*

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## Content in this bundle

- **2.1 Approach**
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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/unveiling-the-effects-of-foreign-exchange-intervention-a-panel-approach-43019_