Can central banks be heard over the sound of gunfire?

Ge Gao, Alex Nikolsko‐rzhevskyy, Oleksandr Talavera*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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Abstract

In this study, we examined the effectiveness of central bank communications during times of significant adverse shocks. Specifically, we examined how the National Bank of Ukraine (NBU) regulated foreign exchange (FX) markets during the Russo-Ukrainian War in 2022. Data collected from both the black and authorized FX markets suggested that the content of the NBU's announcements significantly impacted FX market agents. Announcements aimed at maintaining a fixed (floating) FX rate prompted an increase (decrease) in the black market premium in cash transactions. Moreover, the NBU's announcements influenced the sale side of foreign currency more than any other aspect, an area where the black market FX traders held near monopolistic power.
Original languageEnglish
JournalJournal of Financial Research
Early online date26 Oct 2023
DOIs
Publication statusE-pub ahead of print - 26 Oct 2023

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