Myths and reality of foreign exchange interventions: an application to Japan


  • The original version of this paper was presented at the conference ‘Exchange Rate Intervention: Theory and Experience,’ 7–8 September 2006, at Clare College, Cambridge, UK. The author is grateful to anonymous referee, Kathryn Dominguez, Mark Taylor, and other participants of the conference for their helpful comments. He is also grateful to Tomoyoshi Yabu for his assistance in econometric work in the past. Research support by JSPS Grants-in-aid for Scientific Research, No. 15203008, is gratefully acknowledged.


The objective of this paper is to examine what we know, and do not know, about foreign exchange interventions by the monetary authorities, and to present some new evidence on the Japanese intervention activities. With limited data, efforts are made to determine whether some conventionally made assertions are a myth or a fact. Copyright © 2007 John Wiley & Sons, Ltd.