FX Interventions in Brazil: revisiting impacts with a twofold approach

Advisor: Márcio Garcia

Benefiting from a novel dataset published by the Central Bank of Brazil (BCB) we estimate the effects of FX Interventions from 1999 to 2023. We first employ a structural VAR with daily frequency identified with an instrument based on the timing of BCB announcements. Interventions are found to be effective in changing the USDBRL level over a period of 20 working days by 0.24 p.p. for each 1USD billion employed. We then implement an Artificial Counterfactual (ArCo) approach to each intervention episode separating them by side and instrument. Compared to SVAR interventions are found to be more effective although with smaller statistical significance. Spot Interventions are more effective than Swaps. We find no effects of interventions over the shortterm volatility of the USDBRL.