There is substantial research supporting the "J-Curve" effect and contractionary effects on economies due to devaluation, especially for less developed countries (LDCs). The World Bank and the International Monetary Fund (IMF), however, have been promoting devaluation as a policy tool for...

This paper presents a model of exchange rate determination in which the forward premium anomaly emerges as the result of unanticipated central bank interventions in the foreign exchange market. Deviations from uncovered interest parity (UIP) therefore represent neither unexploited profit...