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Do Interventions Contain Information? Evidence from the Australian Foreign Exchange Market
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Sandra Hopkins and Jonathon Murphy
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Abstract
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In 1993, the political uncertainty regarding the passage of the Federal Budget
through the Senate was reflected in the foreign exchange market. During August
and September 1993, the Australian dollar depreciated by 7.5%. We present the
results of a case study of the impact of official intervention and the
information available to the market participants on the Australian dollar value
over this period. We use daily data on the volume of intervention, the movement
of the dollar and Reserve Bank of Australia announcements on intervention to
consider the relative importance of information in the market. Our results
indicate that the informational content of interventions is a major factor in
the success of intervention policy.
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Download this article.
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Keywords
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EXCHANGE RATE; INTERVENTION; INFORMATION.
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Contact Details
Sandra Hopkins
School of Economics and Finance
Curtin University of Technology
PO Box U1987
Perth WA 6001
Email: hopkinss@cbs.curtin.edu.au
Jonathon Murphy
Department of Resources Development
170 St George's Terrace
Perth WA 6000
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We are grateful to Dr Meher Manzur and two anonymous referees for their
helpful advice and comments. We would also like to thank Paula Haslehurst
for providing excellent research assistance.
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