Do Interventions Contain Infor Mation? Evidence from the Australian Foreign Exchange Market

Abstract

In 1993, the political uncertainty regarding the passage of the Federal Budget through the Senate was reflected in the foreign exchange market. During August and September 1993, the Australian dollar depreciated by 7.5%. We present the results of a case study of the impact of official intervention and the infor Mation available to the market participants on the Australian dollar value over this period. We use daily data on the volume of intervention, the movement of the dollar and Reserve Bank of Australia announcements on intervention to consider the relative importance of infor Mation in the market. Our results indicate that the infor Mational content of interventions is a major factor in the success of intervention policy.