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Persistence in the Variability of Daily Exchange Rates

Rational speculation in foreign exchange trading is often assumed to dampen exchange rate fluctuations by bringing the market back to fundamentals. Nevertheless, information congestion provides incentives for traders to follow positive feedback strategies which result in persistent and volatile exch...

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Bibliographic Details
Main Author: Tsibouris, George
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 1991
Series:IMF Working Papers
Subjects:
Government And The Monetary System
Payment Systems
Finance
Monetary Economics
Currency; Foreign Exchange
Regimes
Exchange Rate Adjustments
Money
International Financial Markets
Currency Markets
Foreign Exchange
Standards
Financial Markets
Currencies
Monetary Systems
Foreign Exchange Market
Exchange Rates
Money And Monetary Policy
Exchange Rate Analysis
Finance: General
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:Rational speculation in foreign exchange trading is often assumed to dampen exchange rate fluctuations by bringing the market back to fundamentals. Nevertheless, information congestion provides incentives for traders to follow positive feedback strategies which result in persistent and volatile exchange rate behavior by magnifying the impact of exogenous shocks. Empirical evidence is presented which is consistent with such autocatalytic effects
Physical Description:26 pages
ISBN:9781451852738

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