Foreign exchange interventions are commonly used by monetary authorities in many countries. The traditional and the most popular market for conducting such operations is the spot market. A rapid growth of derivatives markets in recent years raises a question whether such instruments can also be used as an intervention tool. The article shows how foreign exchange derivatives can be used in this manner and presents selected experiences from other countries'. The conclusion is that under some circumstances using derivatives can be more effective than intervening in the spot market, yet they need to be used with caution due to the large risk involved.

Keywords: foreign exchange interventions, forward, swap, options, speculative attack.

  Krzysztof Gajewski, Foreign Exchange Interventions in Derivatives Markets. Methods and Review of Selected Experiences - plik pdf; (287 KB)