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The Efficacy of Foreign Exchange Market Intervention in Malawi

Author

Listed:
  • Kisukyabo Simwaka

    (Reserve bank of Malawi, P.O. Box 30063, Lilongwe, Malawi)

  • Leslie Kwacha Mkandawire

    (Reserve Bank of Malawi, P.O. Box 30063, Lilongwe, Malawi)

Abstract

The Malawi Kwacha was floated in February 1994. However, the Reserve Bank of Malawi has actively intervened in the foreign exchange market. Both the levels and volatility of the exchange rate have changed so much between January 1995 and December 2003, perhaps connoting that the market is not working so well or else a result of impromptu management. Using the daily exchange rate and official intervention data from January 1995 to December 2003 the paper is intended to examine the effects the Reserve Bank of Malawi foreign exchange operations have had on the level and volatility of the Malawi Kwacha exchange rate. The direct effects on the level of exchange rate will be assessed using an event study approach. Policy intervention effects on the exchange rate volatility shall be examined over the period of floatation of the exchange rate..

Suggested Citation

  • Kisukyabo Simwaka & Leslie Kwacha Mkandawire, 2004. "The Efficacy of Foreign Exchange Market Intervention in Malawi," Macroeconomics 0407022, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0407022
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    References listed on IDEAS

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    Cited by:

    1. Muhammad Kashif Ali Shah & Zulfiqar Hyder & Muhammad Khalid Pervaiz, 2009. "Central bank intervention and exchange rate volatility in Pakistan: an analysis using GARCH-X model," Applied Financial Economics, Taylor & Francis Journals, vol. 19(18), pages 1497-1508.
    2. Ledenyov, Dimitri O. & Ledenyov, Viktor O., 2015. "Wave function method to forecast foreign currencies exchange rates at ultra high frequency electronic trading in foreign currencies exchange markets," MPRA Paper 67470, University Library of Munich, Germany.

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    More about this item

    Keywords

    exchange rate volatility; market intervention;

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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