Foreign Exchange Intervention (Adler and Tovar)

Foreign exchange intervention: A shield against appreciation winds? by Gustavo Adler and Camilo E. Tovar, published by IMF. “This paper examines foreign exchange intervention practices and their effectiveness using a new qualitative and quantitative database for a panel of 15 economies covering 2004-10, with special focus on Latin America. Results suggest that interventions slow the pace of appreciation, but the effects decrease rapidly with the degree fo capital account openness. At the same time, interventions are more effective in the context of already ‘overvalued`exchange rates.”