In this seminar Patrick Carvalho will provide an overview of his paper, The Effectiveness of Central Bank Sterilised Intervention in the Exchange Rate Market: The Case of Brazil. Patrick will outline the findings of his research into the effectiveness of central bank foreign exchange interventions in Brazil from June 2009 until May 2012.

During this period, Brazil’s monetary authority consistently purchased US dollars in sterilised interventions, while the Brazilian currency underwent intensive appreciation. Using daily data, a two-stage econometric approach was employed taking into account the contemporaneous endogeneity between exchange rate movements and foreign exchange intervention.

The results provide robust evidence for the impact of sterilised interventions in Brazil. Ceteris paribus, a one-hundred million US dollar purchase is estimated over the sample period to depreciate on average the local currency by 7.8 percentage points.

Patrick Carvalho, a PhD student at the Centre for Applied Macroeconomic Analysis at the Crawford School, is the former Head of the Economic Studies Division at the Federation of Industries of Rio de Janeiro and co-author of Great Southern Lands: Building Ties Between Australia and Brazil.

The CAMA Macroeconomics Brown Bag Seminars offer CAMA speakers, in particular PhD students, an opportunity to present their work in progress in front of their peers, and reputable visitors to showcase their work.