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Economic Commentary

On the Rotation of the Earth, Drunken Sailors, and Exchange Rate Policy

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A growing number of observers seem to believe that official foreign exchange intervention offers a useful tool for managing the dollar’s descent. In particular situations, official transactions can sometimes produce temporary changes in exchange rates, but intervention does not permit countries to avoid or substantially modify trends in the movements of the exchange rates. At best, intervention is of very limited value.

02.15.2004EC 2/15/2004

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.

Suggested Citation

Humpage, Owen F. 2004. “On the Rotation of the Earth, Drunken Sailors, and Exchange Rate Policy.” Federal Reserve Bank of Cleveland, Economic Commentary 2/15/2004.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International