Publications

Working Papers

(WP3/2020) The Effectiveness of Currency Intervention in a Commodity-Exporter: Evidence From Mongolia

Publish Date: : March 2020
Authors:: Victor Pontines, Davaajargal Luvsannyam, Enkhjin Atarbaatar, Ulziikhutag Munkhtsetseg

Summary


A new SEACEN Working Paper by Victor Pontines and co-authors from Bank of Mongolia, namely, Davaajargal Luvsannyam, Enkhjin Atarbaatar, Ulziikhutag Munkhtsetseg is now available. The paper titled “The Effectiveness of Currency Intervention in a Commodity Exporter: Evidence from Mongolia" analyzes the impact of foreign exchange intervention in Mongolia on the changes in the MNT/USD exchange rate.

The authors found that currency intervention is effective in Mongolia, although it differs in certain ways:
•  Currency sales are effective in moving changes in the MNT/USD in the correct direction, especially when carried out in larger amounts and when implemented frequently.
•  This effect can last from one to three weeks, although we find the magnitude of the daily effect to be relatively small.
•  We do not find evidence, however, that currency purchases are effective, due albeit to the nature of the sample period that we examine which is by far dominated by currency sales.
•  These findings are comparable to the existing literature on the effectiveness of intervention in emerging market economies.