Foreign exchange intervention policy: With or without transparency? the case of japan

Research output: Contribution to journalArticle

Abstract

This paper examines different aspects of transparency in the foreign exchange policy. More precisely, it analyses how transparency evolved over the last decades in Japan and how market participants reacted to the changes in transparency. For this, we create a dataset capturing the main features of the central bank policy and market perception from 1991 to 2004. Our results suggest that Japanese authorities adopted several changes in their policy, sometimes practicing transparency and sometimes ambiguity. These changes had contrasted impact on market perception: frequent statements revealing the preferences of the central bank regarding the exchange rate level confused the markets, while those designed to confirm an actual intervention reduced uncertainty. These results suggest that, in general, actual interventions should still be considered, provided that the authorities talk to the market and intervene in an appropriate way.

Original languageEnglish
Pages (from-to)5-34
Number of pages30
JournalEconomie Internationale
Volume113
Issue number1
Publication statusPublished - 1 Dec 2008

Fingerprint

Transparency
Foreign exchange intervention
Japan
Authority
Uncertainty
Central bank policy
Foreign exchange
Central bank
Exchange rates

Keywords

  • Central Bank Interventions
  • Foreign Exchange Market
  • Rumours
  • Transparency

Cite this

@article{b2b96e68f90c40339211cc5b3d0d4ea7,
title = "Foreign exchange intervention policy: With or without transparency? the case of japan",
abstract = "This paper examines different aspects of transparency in the foreign exchange policy. More precisely, it analyses how transparency evolved over the last decades in Japan and how market participants reacted to the changes in transparency. For this, we create a dataset capturing the main features of the central bank policy and market perception from 1991 to 2004. Our results suggest that Japanese authorities adopted several changes in their policy, sometimes practicing transparency and sometimes ambiguity. These changes had contrasted impact on market perception: frequent statements revealing the preferences of the central bank regarding the exchange rate level confused the markets, while those designed to confirm an actual intervention reduced uncertainty. These results suggest that, in general, actual interventions should still be considered, provided that the authorities talk to the market and intervene in an appropriate way.",
keywords = "Central Bank Interventions, Foreign Exchange Market, Rumours, Transparency",
author = "Gnabo, {Jean Yves} and Christelle Lecourt",
year = "2008",
month = "12",
day = "1",
language = "English",
volume = "113",
pages = "5--34",
journal = "Economie Internationale",
issn = "1240-8093",
publisher = "Documentation Francaise",
number = "1",

}

Foreign exchange intervention policy : With or without transparency? the case of japan. / Gnabo, Jean Yves; Lecourt, Christelle.

In: Economie Internationale, Vol. 113, No. 1, 01.12.2008, p. 5-34.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Foreign exchange intervention policy

T2 - With or without transparency? the case of japan

AU - Gnabo, Jean Yves

AU - Lecourt, Christelle

PY - 2008/12/1

Y1 - 2008/12/1

N2 - This paper examines different aspects of transparency in the foreign exchange policy. More precisely, it analyses how transparency evolved over the last decades in Japan and how market participants reacted to the changes in transparency. For this, we create a dataset capturing the main features of the central bank policy and market perception from 1991 to 2004. Our results suggest that Japanese authorities adopted several changes in their policy, sometimes practicing transparency and sometimes ambiguity. These changes had contrasted impact on market perception: frequent statements revealing the preferences of the central bank regarding the exchange rate level confused the markets, while those designed to confirm an actual intervention reduced uncertainty. These results suggest that, in general, actual interventions should still be considered, provided that the authorities talk to the market and intervene in an appropriate way.

AB - This paper examines different aspects of transparency in the foreign exchange policy. More precisely, it analyses how transparency evolved over the last decades in Japan and how market participants reacted to the changes in transparency. For this, we create a dataset capturing the main features of the central bank policy and market perception from 1991 to 2004. Our results suggest that Japanese authorities adopted several changes in their policy, sometimes practicing transparency and sometimes ambiguity. These changes had contrasted impact on market perception: frequent statements revealing the preferences of the central bank regarding the exchange rate level confused the markets, while those designed to confirm an actual intervention reduced uncertainty. These results suggest that, in general, actual interventions should still be considered, provided that the authorities talk to the market and intervene in an appropriate way.

KW - Central Bank Interventions

KW - Foreign Exchange Market

KW - Rumours

KW - Transparency

UR - http://www.scopus.com/inward/record.url?scp=66749115982&partnerID=8YFLogxK

M3 - Article

VL - 113

SP - 5

EP - 34

JO - Economie Internationale

JF - Economie Internationale

SN - 1240-8093

IS - 1

ER -