Foreign exchange intervention and central bank independence: the Latin American experience

Abstract

Employing data from 13 Latin American countries, we find that greater central bank independence is associated with lesser intervention in the foreign exchange market, and also with leaning-against-the-wind intervention. We also find that the structural reforms that occurred in Latin America mostly in the 1990s helped to reduce the need for foreign exchange intervention.

Acknowledgements

S. Da Silva and M. Nunes acknowledge financial support from the Brazilian agencies CNPq and CAPES-Procad.