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Regional How Powerful is Unannounced, Sterilized Foreign Exchange Intervention?

Author

Listed:
  • Alain Naef
  • Jacob P. Weber
Abstract
Though most central banks actively intervene on the foreign exchange market, the literature offers mixed evidence on their effectiveness: particularly for unannounced interventions. We use new, declassified data from the archives of the Bank of England and the institutional features of the Bretton Woods era to estimate the effects of intervention on the exchange rate. We find that a purchase of pounds equivalent to 1% of the money supply causes a statistically significant, 4-5 basis point appreciation in the pound.

Suggested Citation

  • Alain Naef & Jacob P. Weber, 2021. "Regional How Powerful is Unannounced, Sterilized Foreign Exchange Intervention?," Working papers 834, Banque de France.
    • Handle: RePEc:bfr:banfra:834
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    References listed on IDEAS

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    8. Alain Naef, 2021. "Dirty float or clean intervention? The Bank of England in the foreign exchange market," European Review of Economic History, European Historical Economics Society, vol. 25(1), pages 180-201.
    9. Alain Naef, 2020. "Blowing against the Wind? A Narrative Approach to Central Bank Foreign Exchange Intervention," Working Papers 0188, European Historical Economics Society (EHES).
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    14. Menkhoff, Lukas & Rieth, Malte & Stöhr, Tobias, 2021. "The Dynamic Impact of FX Interventions on Financial Markets," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 103(5), pages 939-953.
    15. Kathryn M.E. Dominguez & Rasmus Fatum & Pavel Vacek, 2013. "Do Sales of Foreign Exchange Reserves Lead to Currency Appreciation?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(5), pages 867-890, August.
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    18. repec:mcb:jmoncb:v:45:y:2013:i::p:867-890 is not listed on IDEAS
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    Cited by:

    1. Alain Naef, 2020. "Blowing against the Wind? A Narrative Approach to Central Bank Foreign Exchange Intervention," Working Papers 0188, European Historical Economics Society (EHES).
    2. Alain Naef & Jacob P. Weber, 2023. "How Powerful Is Unannounced, Sterilized Foreign Exchange Intervention?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(5), pages 1307-1319, August.

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    More about this item

    Keywords

    Monetary Policy; Foreign Exchange Markets; Bretton Woods System;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • N2 - Economic History - - Financial Markets and Institutions

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