Abstract
It is generally argued that central banks in emerging market countries, motivated by a desire to defend export competitiveness, tend to intervene in foreign exchange markets to limit currency appreciations rather than depreciations. Using panel data from 13 emerging market countries for the period 1998:M1 to 2016:M12, we find that exchange rate shocks play an important role in determining the accumulation of international reserves. Moreover, we find evidence that central banks in emerging markets tend to follow a “leaning against the depreciation wind” policy, rather than the appreciation wind (i.e., we provide evidence of a “fear of depreciation”).
Original language | English |
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Pages (from-to) | 1561-1586 |
Number of pages | 26 |
Journal | Scandinavian Journal of Economics |
Volume | 121 |
Issue number | 4 |
DOIs | |
Publication status | Published - 2019 Oct 1 |
All Science Journal Classification (ASJC) codes
- Economics and Econometrics