The foreign exchange market interventions of the European Central Bank

M. Frenkel (), C. Pierdzionc () and G. Stadtmann ()
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M. Frenkel: WHU Koblenz, Department of Economics, Macroeconomics and International Economics, Vallendar
C. Pierdzionc: Institute of World Economics, Financial Markets Group, Kiel (Germany)
G. Stadtmann: WHU Koblenz, Department of Economics, Macroeconomics and International Economics, Vallendar (Germany)

BNL Quarterly Review, 2001, vol. 54, issue 218, 249-287

Abstract: We analyze the effectiveness of the foreign exchange market interventionsconducted by the European Central Bank (ECB) in the fall of 2000 to support the external stability of the euro. To this end, we discuss different channels through whichinterventions may influence exchange rate dynamics. We use the insights provided by the theoretical and empirical literature to evaluate the effectiveness of theintervention policy of the ECB. In addition, we present an empirical analysis in which we use intra-daily exchange rate data to examine in detail the effects of theinterventions. We find that the interventions only had a rather short-term impact on the exchange rate path and had no effects beyond the short term. Therefore, our results suggest that the intervention policy of the ECB was not effective.

Keywords: Exchange Rates; Foreign Exchange (search for similar items in EconPapers)
JEL-codes: E58 F02 F15 F31 F33 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (10)

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