Keywords
Monetary Policy
Central Banking
Foreign Exchange
How to Cite
Abstract
The central Banks that apply a framework of monetary policy based on inflation targeting do not recognize that their foreign exchange market interventions represent a second monetary policy instrument used regularly with the aim of achieving monetary policy goals. The above on the grounds that under a flexible exchange rate regime foreign exchange market interventions are ineffective. The present paper looks into empirical evidence of the Banco de México’s foreign exchange market interventions. It is shown, on the basis of econometric results, that those interventions are effective indeed; hence the nominal exchange rate appears to play an instrumental role in the stabilization strategy of the monetary authority.© 2018, Facultad de Contaduría y Administración, Universidad Nacional Autónoma de México. All rights reserved. Publication of the article implies full assignment of property rights (copyright) in Journal of Contaduría y Administración. The publication mreserves the right to total or partial reproduction of the work in other print, electronic or any other alternative means, but always recognizing its responsibility.
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