Transparency versus constructive ambiguity in foreign exchange intervention

by Priscilla Chiu

Working Papers No 144
October 2003

Based on a survey of 10 central banks and a review of existing literature, this paper examines the choice between transparency versus ambiguity in central banks' foreign exchange intervention. Three case studies - Canada, Hong Kong SAR and Japan - are presented to highlight the problems facing central banks in this choice, and the changes that have been made to cope with those challenges.