Factors Influencing Emerging Market Central Banks' Decision to Intervene in Foreign Exchange Markets
ISBN: 9781475536928
Platform/Publisher: Ebook Central / International Monetary Fund
Digital rights: Users: Unlimited; Printing: Limited; Download: 7 Days at a Time
Subjects: Business/ Management; Economics;

Using panel data for 15 economies from 2001-12, I identify determinants of central bank foreign exchange intervention in emerging markets ("EMs") with flexible to moderately managed exchange rates. Similar to other studies, I find that central banks tend to "lean against the wind," buying/selling more foreign exchange in response to greater short-run and medium-run appreciation/depreciation pressures. The panel structure provides a framework to test whether other macroeconomic variables influence the different rates of reserve accumulation between economies. In testing other variables, I find evidence of both precautionary and external competitiveness motives for reserve accumulation.


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