Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152797
Authors: 
Fratzscher, Marcel
Year of Publication: 
2004
Series/Report no.: 
ECB Working Paper 363
Abstract: 
This paper deals with the very short-term influence of "oral interventions" on the exchange rate of major currencies. The paper finds that official communication, as reported by wire services, are effective in influencing the US dollar-euro and yen-US dollar exchange rates in the desired direction on intervention days. Oral interventions are found to be substantially more effective if they deviate from the prevalent policy "mantra". They also tend to reduce market volatility whereas actual interventions raise volatility. A key result of the paper is that oral interventions are effective independently from the stance and direction of monetary policy as well as the occurrence of actual interventions. This suggests that oral interventions might constitute, on a short-term basis, an effective and largely autonomous policy tool.
Subjects: 
communication
euro area
exchange rate
intervention
policy
United States
JEL: 
E61
E58
F31
Document Type: 
Working Paper

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