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Foreign exchange intervention in Peru

In: Sovereign risk: a world without risk-free assets?

Author

Listed:
  • Renzo Rossini

    (Central Bank of Peru)

  • Zenon Quispe

    (Central Bank of Peru)

  • Enrique Serrano

    (Central Bank of Peru)

Abstract
The unprecedented monetary expansion implemented by central banks in developed economies during recent years has induced an extraordinary flow of funds to emerging economies and supported high commodity prices. This has created upward pressures on the value of local currencies and a further expansion of available funds and lending. This situation gave rise to concerns about a posible misalignment of the real exchange rate relative to its equilibrium level, especially because it can be deemed a temporary response to the current phase of the cycle in developed economies, but with a potentially lasting negative impact on the tradable sector of the economy. In Peru, the response to this situation has been an intensification of sterilized intervention in the foreign exchange market and the use of reserve requirements on local banks foreign currency liabilities, reinforcing macro-financial stability in an economy with a partially dollarized financial system. Both instruments have contributed significantly to reducing excessive exchange rate volatility, building up an international reserve buffer, and ensuring a normal flow of bank credit.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Renzo Rossini & Zenon Quispe & Enrique Serrano, 2013. "Foreign exchange intervention in Peru," BIS Papers chapters, in: Bank for International Settlements (ed.), Sovereign risk: a world without risk-free assets?, volume 73, pages 243-262, Bank for International Settlements.
    • Handle: RePEc:bis:bisbpc:73-18
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    References listed on IDEAS

    as
    1. Jaromir Benes & Andrew Berg & Rafael Portillo & David Vavra, 2015. "Modeling Sterilized Interventions and Balance Sheet Effects of Monetary Policy in a New-Keynesian Framework," Open Economies Review, Springer, vol. 26(1), pages 81-108, February.
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    14. Renzo Rossini & Zenon Quispe & Donita Rodriguez, 2011. "Capital flows, monetary policy and forex intervention in Peru," BIS Papers chapters, in: Bank for International Settlements (ed.), Capital flows, commodity price movements and foreign exchange intervention, volume 57, pages 261-274, Bank for International Settlements.
    15. Mr. Mark R. Stone & Mr. Etienne B Yehoue & Kotaro Ishi, 2009. "Unconventional Central Bank Measures for Emerging Economies," IMF Working Papers 2009/226, International Monetary Fund.
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    18. Arena, Marco & Tuesta, Pedro, 1999. "El objetivo de la intervención del Banco Central: ¿El nivel del tipo de cambio, la reducción de la volatividad cambiaria o ambos?: Un análisis de la experiencia peruana 1991 - 1998," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 5.
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    Citations

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    Cited by:

    1. Aguirre, Pablo & Alonso, José Antonio & Jerez, Miguel, 2019. "Effectiveness of capital account regulation: Lessons from Brazil and Peru," International Review of Economics & Finance, Elsevier, vol. 64(C), pages 176-194.
    2. Miguel Fuentes & Pablo Pincheira & Juan Manuel Julio & Hernán Rincón, 2014. "The effects of intraday foreign exchange market operations in Latin America: results for Chile, Colombia, Mexico and Peru," Borradores de Economia 12258, Banco de la Republica.
    3. Gabriela Mundaca, 2018. "Central bank interventions in a dollarized economy: managed floating versus inflation targeting," Empirical Economics, Springer, vol. 55(4), pages 1507-1535, December.
    4. Choy, Marylin & Chang, Giancarlo, 2014. "Medidas macroprudenciales aplicadas en el Perú," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 27, pages 25-50.
    5. Renzo Rossini & Adrián Armas & Zenón Quispe, 2014. "Global policy spillovers and Peru’s monetary policy: inflation targeting, foreign exchange intervention and reserve requirements," BIS Papers chapters, in: Bank for International Settlements (ed.), The transmission of unconventional monetary policy to the emerging markets, volume 78, pages 241-264, Bank for International Settlements.
    6. Erick Lahura & Marco Vega, 2013. "Asymmetric effects of FOREX intervention using intraday data: evidence from Peru," BIS Working Papers 430, Bank for International Settlements.
    7. Mr. David J Hofman & Mr. Marcos d Chamon & Mr. Pragyan Deb & Mr. Thomas Harjes & Umang Rawat & Itaru Yamamoto, 2020. "Intervention Under Inflation Targeting--When Could It Make Sense?," IMF Working Papers 2020/009, International Monetary Fund.
    8. Melesse Tashu, 2014. "Motives and Effectiveness of Forex Interventions: Evidence from Peru," IMF Working Papers 2014/217, International Monetary Fund.
    9. Martin Vesna, 2020. "Intervention Strategies in Foreign Exchange Market," Economic Themes, Sciendo, vol. 58(3), pages 381-399, September.
    10. Renzo G Rossini and Zenón Quispe, 2017. "Implementation of macroprudential policy in Peru," BIS Papers chapters, in: Bank for International Settlements (ed.), Macroprudential policy frameworks, implementation and relationships with other policies, volume 94, pages 257-275, Bank for International Settlements.

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    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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