Foreign investment ‘restored’ exchange rates after policy shocks – paper
Data from Colombian central bank shows foreign exchange intervention has “short-lived effects” on prices
Capital flows originating from foreign investors restore exchange rates back to their original level following foreign exchange interventions, a working paper published by the Central Bank of Colombia says.
Using data from the central bank from 2002 to 2012, authors Guido Kuersteiner, David Phillips and Mauricio Villamizar identify responses of price, stock and flow variables to policy shocks.
"At horizons of a few days, our empirical findings support sterilised exchange rate intervention
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