Theoretical Aspects of Central Bank's Currency Interventions

ФІНАНСОВИЙ ПРОСТІР № 1 (17) 2015

JEL CLASSІFІCATІON: D51, E52, E58

THEORETICAL ASPECTS OF CENTRAL BANK’S CURRENCY INTERVENTIONS MANAGEMENT

Nadiia E. BODROVA Candidate of Technical Science, Professor assistant of finance chair of National Aerospace University “KhAI”

Summary. The mechanism of the central banks’ politics targets and also instruments of their currency intervention is viewed. The forms of the realization are examined. The criteria of the currency interventions depended on monetary and currency interventions efficiency stimation are adduced.

Key words: sterilized intervention, unsterilized intervention, inflation, money supply, exchange rate, international reserves.

In the article the problems of monetary and for- as inflation, money supply, gross domestic product; eign exchange policies, bound with transition from presence of the sufficient volume of the official re- exchange rate targetting to inflation targetting in serves in the country. modern economic conditions are reviewed. Usage of The main factors which is influense on the in- the floating exchange rate the minimum applying of terventions efficiency are value of intervention in currency interventions by central banks or their full relation to exchange market operations volumes, absence. However, in practice many banks of devel- regularity of interventions and sequence number of oped countries resort to interventions for exchange operation in a serial. The padding factors are scale of rate regulation and maintenance of macroeconomic intervention, time of intervention realization and de- equilibrium. The realization of interventions allows gree of its unexpectedness and level of the economi- essentially to reduce the volatility of the courses cre- cal system inertance. ating padding load on economics, and also to coun- In the article three criteria of the estimation of inter destabilizing speculative influencing on the part terventions efficiency are adduced. By the first criteria of the internal exchange market. the success of interventions is determined depending The currency interventions grounded on changes on a directivity of the exchange rate changing. By the of country’s official reserves, however, depending on second criteria the efficiency of interventions is val- their kind (sterilized or unsterilized) render ambigu- ued on a degree of the trend change slackening. The ous influencing on money base, at the end, on money basic index of the third criteria is the alignment of supply in the country. The realization of the steril- the exchange rate oscillation for the previous period. ized interventions is prefer, as thus the central banks Besides, it’s necessary to take into account the through compensatory measures minimize of risk of regime of the exchange rate regulation which is ap- the internal monetary policy changes. plying by central bank. For central banks, which one Also in the article is rotined, that for achievement adhere to fixed exchange rate, the most significant of positive effect from interventions realization, the factor is the coordination with other central banks. fulfilment of such conditions is necessary: confidence In countries with the floating exchange rate the vol- of the market participants to central bank’s policy; ume of interventions is played more relevant role. change of the main macroeconomic parameters, such

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