02038cas a2200265 a 4500 AALejournalIMF021260 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513557663 1018-5941 BD-DhAAL BD-DhAAL Kim, Minsuk. Do FX Interventions Lead to Higher FX Debt? : Evidence from Firm-Level Data / Minsuk Kim, Rui Mano, Mico Mrkaic. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (35 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Central banks often buy or sell reserves---so called FX interventions (FXIs)---to dampen sharp exchange rate movements caused by volatile capital flows. At the same time, these interventions may entail unintended side effects. In this paper, we investigate whether FXIs incentivize firms to take on more unhedged FX debt, thereby increasing medium-term corporate vulnerabilities. Using a novel dataset with close to 5,000 nonfinancial firms across 19 emerging markets covering 2002--2017, we find that the firm-level share of FX debt rises following intensive use of FXIs, particularly for non-exporting firms in shallow financial markets with no FX debt to begin with. The magnitude of this effect is economically significant, with one standard deviation increase in FXI leading to an average 2 percentage points increase in the FX debt share. For reference, the median share of FX debt in the sample is zero. Mode of access: Internet Mano, Rui. Mrkaic, Mico. IMF Working Papers; Working Paper ; No. 2020/197 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/197/001.2020.issue-197-en.xml IMF e-Library