Discount rate changes and the foreign exchange market

Dallas S. Batten and Daniel Thornton

No 1983-016, Working Papers from Federal Reserve Bank of St. Louis

Abstract: Changes in the discount rate can have an associated announcement effect on the foreign exchange value of the dollar only if these changes are not anticipated by the market. This paper provides evidence to support this contention. Specifically, discount rate changes made for reasons other than technical adjustments have not been anticipated fully and consequently, their announcement has had a significant impact on the dollar's exchange rate. Furthermore, results are obtained that support the hypothesis that unanticipated discount rate changes alter the expectation of the rate of future inflation.

Date: 1983
References: Add references at CitEc
Citations:

Published in Journal of International Money and Finance, December 1984, 3(3), pp. 279-92

Downloads: (external link)
https://s3.amazonaws.com/real.stlouisfed.org/wp/1983/1983-016.pdf (application/pdf)

Related works:
Journal Article: Discount rate changes and the foreign exchange market (1984)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:1983-016

Ordering information: This working paper can be ordered from

DOI: 10.20955/wp.1983.016

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Scott St. Louis ().