Comments on: The Four Rules of Currency Intervention http://alephblog.com/2007/09/29/the-four-rules-of-currency-intervention/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Fri, 25 May 2012 03:46:25 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Steven Miloshttp://alephblog.com/2007/09/29/the-four-rules-of-currency-intervention/comment-page-1/#comment-6721 Steven Milos Mon, 01 Oct 2007 05:44:40 +0000 http://alephblog.com/2007/09/29/the-four-rules-of-currency-intervention/#comment-6721 Bryan, I would agree with all of your conclusions, except for the last, with David's caveat that all of the reactions are temporary, and likely to reverse over time. The conclusion that markets rise everywhere is doubtful; depending on the size of the currency move and the degree of the particular market's dependence on exports, those markets with sharply appreciating currencies are likely to fall, at least initially, unless the intervention is unsterilized. Even then, the blanket statement that markets rise everywhere seems a bit broad to me. Bryan,

I would agree with all of your conclusions, except for the last, with David’s caveat that all of the reactions are temporary, and likely to reverse over time. The conclusion that markets rise everywhere is doubtful; depending on the size of the currency move and the degree of the particular market’s dependence on exports, those markets with sharply appreciating currencies are likely to fall, at least initially, unless the intervention is unsterilized. Even then, the blanket statement that markets rise everywhere seems a bit broad to me.

]]> By: Bryanhttp://alephblog.com/2007/09/29/the-four-rules-of-currency-intervention/comment-page-1/#comment-6715 Bryan Sun, 30 Sep 2007 19:52:57 +0000 http://alephblog.com/2007/09/29/the-four-rules-of-currency-intervention/#comment-6715 Post intervention then,is this correct? The Yen goes down,the carry trade stops unwinding, and greater latitude for a later interest rate rise (which their Central Bank Governor reportedly wants) The Euro drops,pleasing Sarkozy and German exporters Metals drop (especially Gold) whose appreciation I'm guessing, the Central Bankers see as a personal failure) Markets rise everywhere,Retail investors feel wealthier,allowing Banks to further offload whatever crap they have hidden away... Post intervention then,is this correct?
The Yen goes down,the carry trade stops unwinding, and greater latitude for a later interest rate rise (which their Central Bank Governor reportedly wants)
The Euro drops,pleasing Sarkozy and German exporters
Metals drop (especially Gold) whose appreciation I’m guessing, the Central Bankers see as a personal failure)
Markets rise everywhere,Retail investors feel wealthier,allowing Banks to further offload whatever crap they have hidden away…

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