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Meta-Analysis: Meta-Analysis: Effect of FX interventions on the exchange rate

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  • Solomiia Brychka
  • Denys Klynovskyi
  • Dmytro Krukovets
  • Artem Oharkov

    () (Kyiv School of Economics)

Abstract

Today foreign exchange interventions (FXI) remain one the most relevant and widely used policy tool for most Central Banks. The research is aimed at assessing the short-run effect of Central bank foreign exchange market interventions on nominal exchange rate level and volatility. The investigation is conducted in a form of meta-analysis and based on estimates for 8 countries, extracted from 12 studies with a common monetary policy regime. The research suggests that there is no consensus in the literature about the underlying issue. Utilizing a random effects model, we have found that according to employed studies that Central Bank’s FX interventions (USD sold) in the short run lead to local currency appreciation while increasing market volatility. However, these effects are close to zero. The validity of the results has been examined for publication bias by utilizing formal techniques.

Suggested Citation

  • Solomiia Brychka & Denys Klynovskyi & Dmytro Krukovets & Artem Oharkov, 2019. "Meta-Analysis: Meta-Analysis: Effect of FX interventions on the exchange rate," Modern Economic Studies, Kyiv School of Economics, vol. 2(1), pages 24-44.
  • Handle: RePEc:kse:modern:v:2:y:2019:i:1:p:24-44
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    References listed on IDEAS

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    Cited by:

    1. Lucía Arango-Lozano & Lukas Menkhoff & Daniela Rodríguez-Novoa & Mauricio Villamizar-Villegas, 2020. "The Effectiveness of FX Interventions: A Meta-Analysis," Discussion Papers of DIW Berlin 1895, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    foreign exchange interventions; exchange rate; monetary policy; meta-analysis;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • 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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