Colombian paper explores forex intervention announcements
Paper explores how intervention will work in presence of imperfect credibility
A working paper published by the Central Bank of Colombia has shown that under "imperfect credibility" it may be "impossible" for central banks to obtain the "desired" exchange rate level without changing its international reserve position.
In 2012, a model was created in which foreign exchange interventions could be "costless". The author proposed an intervention schedule consisting of a promise to buy or sell a specific amount of foreign currency for every prevailing exchange rate level.
"In
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