IDEAS home Printed from https://ideas.repec.org/a/ukb/journl/y2020i250p4-14.html
   My bibliography  Save this article

How Does the Interest Rate Influence the Exchange Rate?

Author

Listed:
  • Adam Hashchyshyn

    (Kyiv School of Economics)

  • Kateryna Marushchak

    (Kyiv School of Economics)

  • Oleksandr Sukhomlyn

    (National Bank of Ukraine)

  • Andrii Tarasenko

    (University of Mannheim)

Abstract

Understanding the effect of increasing the key policy rate on the exchange rate of the national currency remains one of the most critical issues for central banks. The goal of this study is to infer about the signs and the magnitude of this impact using existing studies conducted for 30 countries and aggregating estimates applying the meta-analysis procedure. Results indicate that the short-term impact of interest rate changes on the exchange rate is positive and statistically significant, although the economic significance is weak, while the longterm relationship is found to be insignificant. The analyzed studies do not reveal any evidence of publication bias, which contributes to the validity of empirical findings. The received results conclude that there might be a short-term appreciation of the hryvnia in response to an increase in the key policy rate in Ukraine.

Suggested Citation

  • Adam Hashchyshyn & Kateryna Marushchak & Oleksandr Sukhomlyn & Andrii Tarasenko, 2020. "How Does the Interest Rate Influence the Exchange Rate?," Visnyk of the National Bank of Ukraine, National Bank of Ukraine, issue 250, pages 4-14.
    • Handle: RePEc:ukb:journl:y:2020:i:250:p:4-14
    DOI: 10.26531/vnbu2020.250.01
    as

    Download full text from publisher

    File URL: https://journal.bank.gov.ua/en/article/2020/250/01
    Download Restriction: no
    File URL: https://libkey.io/10.26531/vnbu2020.250.01?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    monetary policy; exchange rate; interest rate; key policy rate; meta-analysis; transmission mechanism;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • Y90 - Miscellaneous Categories - - Other - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ukb:journl:y:2020:i:250:p:4-14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Research Unit (email available below). General contact details of provider: https://edirc.repec.org/data/nbugvua.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.