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The Effectiveness of Foreign Exchange Interventions in the Republic of Croatia: The Event Study

In: Financije teorija i suvremena pitanja = Finance - theory and contemporary issues

Author

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  • Dražen Koški

    (Josip Juraj Strossmayer University of Osijek, Faculty of Economics)

Abstract

The objectives of this paper are threefold. Firstly, to explain by which channels foreign exchange interventions influence the change of exchange rate. Secondly, to explain why foreign exchange interventions are sometimes not effective. Thirdly, to analyze the effectiveness of foreign exchange interventions of the Croatian National Bank using the event study method. Given the latter, the central bank of the Republic of Croatia, the Croatian National Bank regularly intervenes on the foreign exchange market in order to prevent excessive Euro to Kuna exchange rate fluctuation. In the paper, it is shown that the foreign exchange interventions in the Republic of Croatia, in the period from 2013 to 2017, were mostly effective, disregarding whether they were supporting the exchange rate trend, were going against the trend, or were just smoothing it. In other words, the Croatian National Bank effectively managed Euro to Kuna exchange rate fluctuation.

Suggested Citation

  • Dražen Koški, 2018. "The Effectiveness of Foreign Exchange Interventions in the Republic of Croatia: The Event Study," Occasional Publications, in: Financije teorija i suvremena pitanja = Finance - theory and contemporary issues, edition 1, volume 1, chapter 10, pages 229-251, Josip Juraj Strossmayer University of Osijek, Faculty of Economics.
    • Handle: RePEc:osi:chaptr:18-10
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    exchange rate; foreign exchange interventions; central bank interventions; event study; channels of exchange rate interventions;
    All these keywords.

    JEL classification:

    • 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
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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