This paper contributes to the microstructure approach to exchange rates in two ways. Using a unique dataset that covers 100% of the Brazilian FX financial market, we find a strict link between FX currency flows and the Balance of Payments. Second, we develop an identification strategy that...

Has the recent wave of capital controls and prudential FX measures been effective in promoting exchange rate stability? We tackle this question by studying a panel of 25 countries/currencies from July 1st , 2009 to June 30, 2011. We calculate daily measures of exchange rate volatility, absolute...