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We investigate whether foreign exchange intervention volume matters for the exchange rate effects of intervention. Our investigation employs daily data on Japanese interventions from April 1991 to April 2012 and time-series estimations, non-temporal threshold analysis, as well as binary choice models. We find that intervention volume matters for the effects of intervention, but only to the extent that the exchange rate effect per intervention unit is magnified in a linear sense by the larger intervention amount. This is a policy-relevant finding that also adds to our understanding of how intervention works.

A currency market is an important element in economic politics of the state. The last decades of development of home and world economy were reflected by the huge height of the international moving of capitals and strengthening of role of currency-financial relations. However, a world financial crisis negatively affected international currency relations. Violation of their stability showed up in instability of courses of national currencies of the most world countries. A currency market is the significant constituent of the financial system of the state. Currency market development reflects flexibility of the financial system and speed with that she can adapt to the changes in economic and political life of country to a great extent, and also to the different processes that take place after her limits.