02374cas a2200313 a 4500 AALejournalIMF023002 230101c9999 xx r poo 0 0eng d 20.00 USD 9798400215322 1018-5941 BD-DhAAL BD-DhAAL Filardo, Andrew. Exchange-Rate Swings and Foreign Currency Intervention / Andrew Filardo, R. Gelos, Thomas McGregor. Washington, D.C. : International Monetary Fund, 2022. 1 online resource (41 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 This paper develops a new approach for exploring the effectiveness of foreign currency intervention, focusing on real exchange cycles. Using band spectrum regression methods, it examines the role of macroeconomic fundamentals in determining the equilibrium real exchange rate at short-, medium-, and low frequencies. Next, it assesses the effectiveness of FX intervention depending on the degree of cycle-specific misalignments for 26 advanced- and emerging market economies, covering the period 1990-2018, and using different techniques to mitigate endogeneity concerns. Evidence supports the hypothesis that central banks can lean effectively against short-run cyclical misalignments of the real exchange rate. The effects are present in quarterly data-i.e., at policy-relevant horizons. The effectiveness of intervention rises with the size of the misalignment, and with the duration of one-sided interventions. FX sales appear to be somewhat more effective than FX purchases, and intervention is less effective in more liquid FX markets. Mode of access: Internet Business Fluctuations imf Central Banks and Their Policies imf Foreign Exchange imf International Finance Forecasting and Simulation imf Gelos, R. McGregor, Thomas. IMF Working Papers; Working Paper ; No. 2022/158 Full text available on IMF https://elibrary.imf.org/openurl?genre=journal&issn=1018-5941&volume=2022&issue=158 IMF e-Library