Abstract
I explore the launching of a Brazilian massive program of foreign exchange (FX) interventions in August 2013 to compare discretionary and pre-announced interventions. Using an external instrument approach, I find that Brazilian currency (BRL) appreciates 29.4 bps for each USD 1 billion discretionary intervention and the impact is significant up to the following day of the intervention. In contrast, an intraday event-study shows that the pre-announced intervention program caused a total BRL appreciation of 460 bps. Its public release accounted for 120 bps, while the impact of individual auctions was spread over two months and accounted for the remaining 340 bps. Finally, discretionary interventions are more effective per USD billion.
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