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Briefing

Currency Intervention in Developed Countries

Appears in: Europe, Markets, United Kingdom

Critical Issues

Background:

Excessive movements in European country currencies have provoked intervention by central banks. In Switzerland, the Swiss National Bank (SNB) has turned more aggressive in devaluing the Swiss franc by buying dollars as well as euros. For Denmark, foreign exchange reserves rose to an all-time high in April 2009, leaving it ready to fight another Danish krone (DKK) selloff as the Danish central bank closes its rate gap with the European Central Bank (ECB). The Swedish krona remains the best performing G10 currency. However, the rapid depreciation of the pound sterling (GBP) versus G3 currencies has slowed, reducing risk of intervention by the Bank of England (BoE).

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Associated Readings

Opinions Brown Brothers Harriman Jun 25, 2009 Swiss National Bank has turned more aggressive in its intervention Analysis Bank of America Merrill Lynch May 29, 2009 Sweden: Rough Time | EU: No Deflation | Japan: Exports Recovering | Australia: Soft Landing Opinions Washington Post Sebastian Mallaby May 17, 2009 Repeating A 1930s Mistake? Competitive Devaluations Analysis Bank of New York Mellon Neil Mellor May 15, 2009 More intervention on the cards? News Bloomberg Tasneem Brogger May 07, 2009 Denmark Cuts Benchmark Rate More Than ECB to 1.65%, Holds Record Reserves Research Institute of Economics, University of Copenhagen Rasmus Fatum Apr 14, 2009 Official Japanese intervention in JPY/USD exchange rate market: is it effective and through which channel does it work? Analysis Scotia Capital Erik Nilsson Feb 22, 2009 G-7 approves Japan to intervene in currency market | Severe economic contractions across East Asia Analysis BNP Paribas Jan 29, 2009 When will the SNB and BoJ intervene? Analysis Societe Generale Jan 26, 2009 New fears of intervention in G10 FX? Blogs Tokyo Takes Jan 22, 2009 Should Japan Ignore Tim Geithner and Intervene to Prop Up the Yen? Analysis ING Wholesale Banking Dec 19, 2008 USD/JPY can buck strong dollar trend and fall to 80 in 1H09, raising speculation of yen intervention Analysis Merrill Lynch Masayuki Kichikawa and Takuji Okubo Dec 12, 2008 Yen: Pattern of capital flows presaging intervention? Analysis BNP Paribas Jul 14, 2008 Why USD Intervention Will Be an Option; EUR: EGBs are Expensive; Japan and Dutch Disease Analysis Morgan Stanley Stephen Jen and Charles St-Arnaud Mar 20, 2008 Currency Interventions and Relative Monetary Policy

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