The de facto exchange rate policy in Brazil: 1999-2015
DOI:
https://doi.org/10.1590/0101-416146495vlfsKeywords:
Exchange rates, Foreign exchange interventions, BrazilAbstract
This paper analyses the motives for foreign exchange interventions in Brazil in recent years. Using
monthly data, we estimated the effects of volatility and exchange rate misalignments on the probability
of intervention. Our results indicate that, as formally stated by the Brazilian Central Bank,
foreign interventions have reacted to excess volatility in the exchange market, but we also find
strong evidence that interventions have in fact aimed at curbing exchange rate misalignments.
We find, moreover, that interventions are affected more strongly by episodes of devaluations
of the local currency, vis-à-vis episodes of overvaluation, indicating asymmetric behavior of the
Brazilian Central Bank.
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