Active FX intervention could have long-term costs, says Bank of Mexico deputy
Emerging economies were ‘hit by severe volatility’, Sánchez notes
Emerging market economies that have opted for active foreign exchange intervention or direct management of capital flows could face long-term costs, according to Manuel Sánchez, the Bank of Mexico deputy governor.
"Although these measures may have resulted in short‐term benefits, their costs in terms of market distortions and disincentives for sustainable long‐term flows may be high", he stressed, at the Latin America & Caribbean Government Funds Roundtable on Friday.
The measures were
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