Abstract
This paper examines the central bank intervention in the yen/dollar market and its influence on the foreign exchange traders' speculative positions. We observe that speculators predominantly take up the opposite side of the transaction to the central bank. They appear to increase their relative yen positions when central banks sell yen and lower them when they buy yen. Our results indicate that interventions are more successful when speculators act with the central bank but generally ineffective when they take the other side of the transaction.
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