[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-323988-105":59,"doc-detail-323988-en":130},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":123,"head_meta":125,"extra_data":127,"updated_unix":129},105,"en","on-the-rotation-of-the-earth-drunken-sailors-and-exchange-rate-policy-intervention-and-exchange-rates","On the Rotation of the Earth, Drunken Sailors, and Exchange Rate Policy - Intervention and Exchange Rates","","The text argues that official foreign exchange intervention can sometimes cause short-term movements in exchange rates, but it cannot sustainably alter the adjustment process because it does not change the underlying economic fundamentals. It explains how intervention works through reserve injections or contractions and how central banks often sterilize those effects to protect inflation targets and domestic monetary policy. It further assesses U.S. evidence suggesting intervention is redundant when federal funds and intervention timing coincide, and outlines a possible alternative mechanism via government securities demand by international investors.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/on-the-rotation-of-the-earth-drunken-sailors-and-exchange-rate-policy-intervention-and-exchange-rates/323988/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/on-the-rotation-of-the-earth-drunken-sailors-and-exchange-rate-policy-intervention-and-exchange-rates/323988.png","ImageObject",300,407,{"name":92,"@type":93},"Hazel","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-23","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":24},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"What is foreign exchange intervention, and how does it affect bank reserves?","Question",{"text":112,"@type":113},"Intervention consists of official purchases or sales of foreign exchange meant to influence exchange rates. A purchase injects domestic reserves into the banking system by crediting dealers’ accounts, while a sale contracts commercial bank reserves.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"Why do central banks sterilize intervention?",{"text":117,"@type":113},"Central banks sterilize to keep intervention from interfering with domestic inflation objectives. By offsetting the reserve effects, they prevent intervention from altering money growth that could undermine their policy targets.",{"name":119,"@type":110,"acceptedAnswer":120},"Does intervention allow countries to avoid or modify exchange rate trends?",{"text":121,"@type":113},"The text concludes intervention cannot prevent or materially alter the fundamental adjustment process. At best, it produces temporary exchange-rate changes as markets adjust.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},323988,1790122477,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":24,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":143,"read_time":144,"preview_page_count":4},137441390410,"https://ap-avatar.wpscdn.com/avatar/2000252f4ab5702993?_k=1776741390130283984","by Owen .Humpage  \nOnce was th time when learmedpeople thought that the sun revolvedaround the earth.Indeed,the casualempiricism of the day supported thenotion.The sun rose each morning inthe east and set each night in the westBut,as we all now know,the perceptionbelies the reality.  \nNow is the time,with the dollar's valuesliding sharply against the euro andyen,that a growing number of observersincluding many economists andpolicymakers—believe that officialintervention offers auseful tool formanaging the dollar's descent.Thisperception stems from myriad recentstudies showing that oflicial purchasesand sales of foreign currencies havesometimes affected exchange ratemovements over the short term.Muchof the evidence reflects the experienceof the Japanese Ministry of Financesince 1991.But do these empirical factsfit the conclusion many seem to draw—that such interventions allow countries toavoid or substantially modify trends inthe movements of their exchange rates?  \nTo be sure,foreign exchange interven-tions can sometimes produce temporarychanges in exchange rates as the marketlears about and adjusts to evolvingfundamentals,but because foreignexchange intervention does not changethose fundamentals,it ultimately cannotprevent or materially alter the adjust-ment process.The value of intervention,therefore,is very limited.  \n# On the Rotation of the Earth,DrunkenSailors,and Exchange Rate Policy\n\n■ Intervention and MonetaryPolicy  \nIntervention refers to official purchasesor sales of foreign exchange that aredesigned to influence countries'exchange rates.Except for the instru-ment involved,the mechanics of thetransaction match those of an openmarket operation,and like any openmarket operation,foreign exchangetransactions have the potential to drainor add bank reserves.When,forexample,a central bank buys foreignexchange.it pays in domestic currencybasically by crediting exchange dealers'commercial bank accounts.The processinjects reserves into the banking systemjust as if the central bank had boughtgovernment securities on the openmarket.Similarly,when a central banksells foreign exchange to dealers,itcontracts commercial bank reserves.  \nCentral banks,however,typically offset(or sterilize)the impact of foreignexchange intervention on bank reserves.Any central bank that conducts its mone-tary policy by targeting an overnight,reserve market interest rate—as nearlyll large-country central banks do—or anaggregate amount of reserves-as theBank of Japan does—will automaticallyoffset all transactions that threaten itsoperating target.  \nThey do this to prevent intervention frominterfering with their domestic inflationobjectives.Conflict between an exchangerate and an inflation objective is not acertainty;it depends on why the exchangerate is moving in the first place.If,forexample,a nation's currency is depreciat-ing because its monetary policy has  \nFebruary 15,2004  \nA growing number of observers seemto believe that official foreign exchangeintervention offers a usefu tool formanaging the dollar's descent.Inparticular situations,official transac-tions can sometimes produce tempo-rary changes in exchange rates,butintervention does not permit coun-tries to avoid or substantially modifytrends in themovements of theirexchange rates.At best,interventionis of very limited value.  \nbecome too expansionary and inflation isrising,then selling foreign exchange anddraining bank reserves is consistent bothwith resisting a depreciation and prevent-ing inflation.If,on the other hand,mone-tary policy isachieving its inflation objec-tive,but the domestic currency isdepreciating because residents elect toimport more goods,then selling foreignexchange and draining bank reservesresists depreciation only at the expenseof generating deflation.As a general rule.only when the underlying exchange ratedisturbance stems from domestic mone-tary policies will intervention remaincompatible with a central bank's inflationobjectiveUnder any other type of distur-bance","cbCaifqHGVUIi96f","https://ap.wps.com/l/cbCaifqHGVUIi96f","pdf",1062693,"English","# On the Rotation of the Earth, Drunken Sailors, and Exchange Rate Policy\n## Intervention and Monetary Policy\n## Intervention and Exchange Rates","[{\"question\":\"What is foreign exchange intervention, and how does it affect bank reserves?\",\"answer\":\"Intervention consists of official purchases or sales of foreign exchange meant to influence exchange rates. A purchase injects domestic reserves into the banking system by crediting dealers’ accounts, while a sale contracts commercial bank reserves.\"},{\"question\":\"Why do central banks sterilize intervention?\",\"answer\":\"Central banks sterilize to keep intervention from interfering with domestic inflation objectives. By offsetting the reserve effects, they prevent intervention from altering money growth that could undermine their policy targets.\"},{\"question\":\"Does intervention allow countries to avoid or modify exchange rate trends?\",\"answer\":\"The text concludes intervention cannot prevent or materially alter the fundamental adjustment process. At best, it produces temporary exchange-rate changes as markets adjust.\"}]","On the Rotation of the Earth, Drunken Sailors, and Exchange Rate Policy - Intervention and Exchange Rates | PDF",1789966743,13]