Foreign Exchange Intervention and Central Bank Independence: The Latin American Experience

Mauricio Nunes, Federal University of Rio Grande Do Sul
Sergio Da Silva, Federal University of Santa Catarina

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.