An essay contending that a central bank interested in maintaining price stability gains little from exchange-market intervention, particularly when it acts jointly with fiscal authorities.

A frequently cited explanation for why foreign exchange interventions affect the exchange rate is that these interventions signal future monetary policy intentions. This explanation says that central banks signal a more contractionary monetary policy in the future by buying domestic currency...

An argument against attempts to achieve current-account objectives through monetary manipulation of nominal exchange rates, with an explanation of why such tampering--which for various reasons might appear politically attractive--ultimately harms economic welfare.

An examination of the ability of foreign exchange intervention to signal upcoming changes in monetary policy, showing that for such a signaling mechanism to make sense, the link between intervention and monetary policy should be clear, the implied policy should be credible, and information about...

Foreign-exchange-market intervention is generally ineffective when undertaken independent of monetary policy. But when undertaken as a goal of monetary policy, exchange-rate management can compromise price stability. This Economic Commentary explains the difficulties of implementing an...

This paper reports on the results of an empirical investigation into the objectives of daily foreign exchange market intervention by the Deutsche Bundesbank and the Federal Reserve System in the U.S. dollar-deutsche mark market. Tobit analysis is implemented to estimate the intervention reaction...