IDEAS home Printed from https://ideas.repec.org/a/lif/jrgelg/v2y2013p60-78.html
   My bibliography  Save this article

Effects of Oral Intervention on Fluctuations in Exchange Rates: Evidence from Japan 1995-2011

Author

Listed:
  • Shun Sakata
  • Fumiko Takeda

    () (Economic and Social Research Institute Cabinet Office Government of Japan)

Abstract

This paper studies the effects of oral interventions on the JPY/USD rate between 1995 and 2011. Traditionally, monetary authorities have intervened directly in foreign exchange markets. In recent years, however, actual interventions have been supplemented or supplanted by “oral interventions” to influence market expectations. In the Japanese case, monetary authorities did not directly intervene in the market from 2005 to August 2010. They conducted actual interventions only five times between 2010 and 2012, though Japan has been noted for ongoing oral intervention in recent years. Prior studies examining the impact of oral interventions provide mixed results regarding their effectiveness. Our study attempts to contribute to the literature by focusing not only on the speaker of oral interventions, but also on the content of the statements released. Using the event study methodology, we find that market participants give great credence to announcements by monetary authorities that strike a decidedly positive or negative tone about current exchange rates. In addition, market participants give great credence to statements by speakers who actually conduct exchange rate policy, including staff from the Ministry of Finance and people affiliated with the Bank of Japan

Suggested Citation

  • Shun Sakata & Fumiko Takeda, 2013. "Effects of Oral Intervention on Fluctuations in Exchange Rates: Evidence from Japan 1995-2011," Journal of Reviews on Global Economics, Lifescience Global, vol. 2, pages 60-78.
  • Handle: RePEc:lif:jrgelg:v:2:y:2013:p:60-78
    as

    Download full text from publisher

    File URL: http://www.lifescienceglobal.com/home/cart?view=product&id=516
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Zhichao & Li, He & Zhang, Chuanjie, 2017. "Oral intervention in China: Efficacy of Chinese exchange rate communications," International Review of Financial Analysis, Elsevier, vol. 49(C), pages 24-34.

    More about this item

    Keywords

    Exchange rate; intervention; event study; yen-dollar exchange rate; communication;

    JEL classification:

    • 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

    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:lif:jrgelg:v:2:y:2013:p:60-78. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Faisal Ameer Khan). General contact details of provider: http://www.lifescienceglobal.com .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.