The determinants of foreign exchange intervention by central banks: Evidence from Australia

Suk Joong Kim*, Jeffrey Sheen

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review


Intervention by the Reserve Bank of Australia on foreign exchange markets from 1983 to 1997 is conjectured to have been determined by exchange rate trend correction, exchange rate volatility smoothing, the US and Australian overnight interest rate differentials, profitability and foreign currency reserve inventory considerations. Using Probit and friction models, we show that these factors were significant influences on intervention behaviour. Consistent with the constraint of intervening only when a clear trend is apparent, we find that above average measures of deviations from trend and of volatility muted the response of the Reserve Bank.

Original languageEnglish
Title of host publicationInformation spillovers and market integration in international finance
Subtitle of host publicationempirical analyses
EditorsSuk-Joong Kim
Place of PublicationSingapore
PublisherWorld Scientific Publishing
Number of pages39
ISBN (Electronic)9789813223585
ISBN (Print)9789813223578
Publication statusPublished - 2018

Publication series

NameWorld scientific studies in international economics
PublisherWorld Scientific Publishing
ISSN (Print)1793-3641

Bibliographical note

Originally published in Journal of International Money and Finance, 2002, 21(5), 619–649.


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