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Applying Foreign Exchange Interventions as an Additional Instrument Under Inflation Targeting: The Case of Ukraine

Author

Listed:
  • Anton Grui

    (National Bank of Ukraine)

  • Volodymyr Lepushynskyi

    (National Bank of Ukraine)

Abstract

This study examines applying foreign exchange rate interventions under Inflation Targeting regime in an Emerging Economy. For this purpose, we employ the Quarterly Projection Model of the National Bank of Ukraine and simulate different policy responses to various macroeconomic shocks. We discuss monetary policy objectives, which are low inflation volatility and accumulation of international reserves, and conclude that monetary policy could benefit from using interventions in addition to the key policy rate. We advise on particular policy reactions (with or without FX intervention) in case of different macroeconomic shocks.

Suggested Citation

  • Anton Grui & Volodymyr Lepushynskyi, 2016. "Applying Foreign Exchange Interventions as an Additional Instrument Under Inflation Targeting: The Case of Ukraine," Visnyk of the National Bank of Ukraine, National Bank of Ukraine, issue 238, pages 39-56.
    • Handle: RePEc:ukb:journl:y:2016:i:238:p:39-56
    DOI: 10.26531/vnbu2016.238.039
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    File URL: https://journal.bank.gov.ua/en/article/2016/238/03
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    File URL: https://libkey.io/10.26531/vnbu2016.238.039?utm_source=ideas
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    Citations

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    Cited by:

    1. Anton Grui & Artem Vdovychenko, 2019. "Quarterly Projection Model for Ukraine," Working Papers 03/2019, National Bank of Ukraine.
    2. Anton Grui, 2020. "Uncovered interest parity with foreign exchange interventions under exchange rate peg and inflation targeting: The case of Ukraine," IHEID Working Papers 14-2020, Economics Section, The Graduate Institute of International Studies.
    3. Dmytro Krukovets & Olesia Verchenko, 2019. "Short-Run Forecasting of Core Inflation in Ukraine: a Combined ARMA Approach," Visnyk of the National Bank of Ukraine, National Bank of Ukraine, issue 248, pages 11-20.
    4. Federico Sturzenegger, 2019. "Macri´s Macro: The meandering road to stability and growth," Working Papers 135, Universidad de San Andres, Departamento de Economia, revised Oct 2019.
    5. Anton Grui & Volodymyr Lepushynskyi & Sergiy Nikolaychuk, 2018. "A Neutral Real Interest Rate in the Case of a Small Open Economy: Application to Ukraine," Visnyk of the National Bank of Ukraine, National Bank of Ukraine, issue 243, pages 4-20.

    More about this item

    Keywords

    Foreign exchange interventions; inflation targeting; monetary policy; macroeconomic models;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • 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

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