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Can Central Banks Be Heard Over the Sound of Gunfire?

Author

Listed:
  • Ge Gao

    (Beijing Sport University)

  • Alex Nikolsko-Rzhevskyy

    (Lehigh University)

  • Oleksandr Talavera

    (University of Birmingham)

Abstract

In this study, we examined the effectiveness of central bank communications during times of significant adverse shocks. Specifically, we examined how the National Bank of Ukraine (NBU) regulated foreign exchange (FX) markets during the Russo-Ukrainian War in 2022. Data collected from both the black and authorized FX markets suggested that the content of the NBU's announcements significantly impacted FX market agents. Announcements aimed at maintaining a fixed (floating) FX rate prompted an increase (decrease) in the black market premium in cash transactions. Moreover, the NBU's announcements influenced the sale side of foreign currency more than any other aspect, an area where the black market FX traders held near monopolistic power.

Suggested Citation

  • Ge Gao & Alex Nikolsko-Rzhevskyy & Oleksandr Talavera, 2023. "Can Central Banks Be Heard Over the Sound of Gunfire?," Discussion Papers 23-09, Department of Economics, University of Birmingham.
    • Handle: RePEc:bir:birmec:23-09
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    References listed on IDEAS

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    Cited by:

    1. Tetiana Yukhymenko & Oleh Sorochan, 2024. "Impact of the central bank's communication on macro financial outcomes," IHEID Working Papers 01-2024, Economics Section, The Graduate Institute of International Studies.

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    More about this item

    Keywords

    Russia-Ukraine war; central bank communications; black market premium; forex; ChatGPT;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • 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

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