Integrated Policy Framework—Principles for the Use of Foreign Exchange Intervention

December 21, 2023

Summary

This note guides policy advice on the use of foreign exchange intervention (FXI) as part of the Integrated Policy Framework (IPF) in Fund surveillance. The note provides general principles for the advice in countries with flexible exchange rates and sets out three use cases for FXI that are tied to specific frictions. It explores the use of FXI as part of an overall policy response, allowing the advice to differ with shocks, frictions, and country-specific circumstances.

Subject: Currency markets, Exchange rate adjustments, Exchange rates, Financial markets, Foreign exchange, Inflation, Monetary policy, Political economy, Prices

Keywords: Capital flows, Currency markets, Exchange rate adjustments, Exchange rates, Foreign exchange intervention, FX mismatch, Global, Inflation, Integrated Policy Framework, IPF friction, IPF policy, Macroprudential Policy, Monetary Policy, policy discussion, staff advice

Pages:
61
Volume:
2023
DOI:
https://doi.org/10.5089/9798400263842.007
Issue:
061
Series:
Policy Paper No. 2023/061
Stock No:
PPEA2023061
ISBN:
9798400263842
ISSN:
2663-3493

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