The impact of central bank intervention on exchange-rate forecast heterogeneity

Michel Beine*, Agnès Bénassy-Quéré, Ronald MacDonald

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Citations (Scopus)


We investigate the impact of official foreign exchange intervention on forecast heterogeneity, on the basis of a sample of forecasts made by a large number of commercial banks over two distinct periods, for the DEM (or EUR) and the JPY against the USD. We show that heterogeneity increases as a result of foreign exchange intervention. In the case of the DEM-EUR/USD market this increase is due to unexpected intervention, while for the JPY/USD it is due to expected intervention. Our results also emphasise the role of rumours, especially for the JPY/USD. In sum, official interventions are shown to move market opinions, albeit differently across the two markets. J. Japanese Int. Economies 21 (1) (2007) 38-63.

Original languageEnglish
Pages (from-to)38-63
Number of pages26
JournalJournal of the Japanese and International Economies
Issue number1
Publication statusPublished - Mar 2007


  • Central bank intervention
  • Foreign exchange markets
  • Market micro-structure
  • Survey expectations


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