Our article analyses the behaviour of non-resident participants on domestic financial markets, which are important from the point of view of monetary policy. Due to the determining role played by foreign investors, understanding their behaviour is essential for understanding the main functioning mechanism of the markets. Among domestic markets, we will examine the foreign exchange market, which has particular relevance to monetary policy, owing to the role played by the exchange rate in the economy. We will also review the domestic government bond market, which is important for the central bank in relation to its role played in the transmission of interest rate policy and with regard to the assessment of the credibility of economic policy.
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Article provided by Magyar Nemzeti Bank (The Central Bank of Hungary) in its journal MNB Bulletin.