Meta-Analysis: Meta-Analysis: Effect of FX interventions on the exchange rate

Today foreign exchange interventions (FXI) remain one the most relevant and widely used policy tool for most Central Banks. The research is aimed at assessing the short-run effect of Central bank foreign exchange market interventions on nominal exchange rate level and volatility. The investigation is conducted in a form of meta-analysis and based on estimates for 8 countries, extracted from 12 studies with a common monetary policy regime. The research suggests that there is no consensus in the literature about the underlying issue. Utilizing a random effects model, we have found that according to employed studies that Central Bank’s FX interventions (USD sold) in the short run lead to local currency appreciation while increasing market volatility. However, these effects are close to zero. The validity of the results has been examined for publication bias by utilizing formal techniques.