Patterns of foreign exchange intervention under inflation targeting

The paper documents the use of foreign exchange intervention (FXI) across countries and monetary regimes, with special attention to its under inflation targeting (IT). We find significant differences between advanced (AEs) emerging market economies (EMEs). former group conduct FXI limitedly broadly symmetrically, while this policy instrument in EMEs is pervasive mostly asymmetric, a bias toward purchasing currency, even after taking precautionary motives into account. Within markets, common both IT non-IT regimes. no evidence being used response developments, strong exists that responds rate movements, indicating central banks have dual inflation/exchange-rate objectives. also higher propensity overshoot targets which more pervasive.