BIS paper weighs effectiveness of FX intervention strategies
Policy-makers face varied costs and benefits in FX interventions
Research published yesterday by the Bank for International Settlements (BIS) finds no exchange rate intervention strategy dominates, as they each come with different costs and benefits.
In the working paper Foreign exchange intervention: strategies and effectiveness, authors Nuttathum Chutasripanich and James Yetman compare foreign exchange interventions to reduce volatility and to "lean against" large exchange rate movements. They test a model with three actors: 'fundamentalist' current account
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