Exchange rate behaviour under the EMS regime: was there any systematic change?

Article Abstract:

The European Monetary System (EMS) is not clearly established as a better instrument for exchange rate stabilization for its members than a floating regime. However, the EMS regime is found to demonstrate that there is a trade-off between nominal stability and greater real instability. The Krone, Mark, Pound, Dollar and Lira are found to be less sensitive to significant real shocks than to nominal shocks of the same magnitude. However, the vulnerability is more evident in non-EMS currencies than in EMS currencies.

Administration of General Economic Programs, Currency Stabilization Programs, Economic aspects, European Monetary System, Currency stabilization

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Intervention strategies and exchange rate volatility: a noise trading perpective

Article Abstract:

Noise trading channel hypothesis explains two seemingly abnormal market events namely, the effect of intervention on exchange rate volatility and the secret intervention of central banks on foreign exchange markets. US intervention reduced yen/dollar and DM/dollar exchange rate volatilities in 1985-1986 period since the dollar was already falling and has to be assisted for an orderly fall. Volatility increased in the 1987-1989 period since the dollar is already in the desired level and only needs to be maintained.

Exchange Rates, Economics, Research and Development in the Social Sciences and Humanities, Models, International finance

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Exchange rate dynamics and speculator horizons

Article Abstract:

A speculator's horizon choice is dependent on exchange rate dynamics as these are determinants of the risks and returns that come with speculative activity. In turn, these risks and returns are affected by speculators' horizons. The equilibrium share of short-term speculators depends on market liquidity and the generating processes of underlying shocks.

Research, Speculation

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