Discussion Paper

Do Exchange Rates Fully Reflect Currency Pressures?

Abstract: Currency values are important both for the real economy and the financial sector. When faced with currency market pressures, some central banks and finance ministries turn to foreign exchange intervention (FXI) in an effort to reduce realized currency depreciation, thus diminishing its economic and financial consequences. This post provides insights into how effective these interventions might be in limiting currency depreciation.

Keywords: exchange rates; foreign exchange interventions; exchange market pressure; balance of payments; currency;

JEL Classification: F00;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2022-11-10

Number: 20221110a