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Oral Interventions Versus Actual Interventions in Fx Markets – An Event-Study Approach*


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     I thank Terhi Jokipii for excellent research assistance, as well as two anonymous referees and participants at the conference ‘Exchange Rate Intervention: Theory and Experience’, especially the discussant Mark Taylor, for very helpful comments. The views expressed in this article are those of the author and do not necessarily reflect those of the European Central Bank.


The article assesses whether exchange rate communication – or oral intervention – has been an effective policy tool for monetary authorities to influence exchange rates. It employs an event-study methodology that identifies intervention clusters or events. For the euro–dollar and the dollar–yen exchange rates, the article finds that both oral intervention events and actual intervention events have been highly successful over the short to medium-run. The article shows that the success of intervention events is related to market conditions and to the coordination among policy makers. It also finds that the success of communication and actual interventions is largely unrelated to monetary policy, thus suggesting that interventions primarily function through a coordination channel.