Central Bank Interventions, Communication and Interest Rate Policy in Emerging European Economies

Balázs Égert

Working Papers from Oesterreichische Nationalbank (Austrian Central Bank)

Abstract: This paper analyses the effectiveness of foreign exchange interventions in Croatia, the Czech Republic, Hungary, Romania, Slovakia and Turkey using the event study approach. Interventions are found to be effective only in the short run when they ease appreciation pressures. Central bank communication and interest rate steps considerably enhance their effectiveness. The observed effect of interventions on the exchange rate corresponds to the declared objectives of the central banks of Croatia, the Czech Republic, Hungary and perhaps also Romania, whereas this is only partially true for Slovakia and Turkey. Finally, interventions are mostly sterilized in all countries except Croatia. Interventions are not much more effective in Croatia than in the other countries studied. This suggests that unsterilized interventions do not automatically inuence the exchange rate.

Keywords: central bank intervention; communication; foreign exchange intervention; verbal intervention (search for similar items in EconPapers)
JEL-codes: F31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-cwa, nep-ifn, nep-mon and nep-tra
Date: 2006
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Related works:
Working Paper: Central Bank Interventions, Communication and Interest Rate Policy in Emerging European Economies (2006)
Working Paper: Central Bank Interventions, Communication and Interest Rate Policy in Emerging European Economies (2006)
Journal Article: Central bank interventions, communication and interest rate policy in emerging European economies (2007)
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