Are Successful Interventions Random Events?
From time to time, the United States enters the foreign exchange market in an attempt to influence the behavior of exchange rates. The objective may be to nudge an exchange rate more closely in line with some set of fundamentals or to dampen excessive volatility. Sometimes these interventions appear to be successful, and the dollar quickly reverses direction or moderates its movements. At other times, however, these interventions seem completely ineffectual.
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