How Successful is the G7 in Managing Exchange Rates?

China's Dominance Hypothesis and the Emergence of a Tri-Polar Global Currency System

“…The aim is to carry out an event-study to exploit the global FX market reaction to official statements made by Chinese authorities on exchange rate and reserve policy so as to identify their exchange rate impact, in particular for emerging Asian currencies. The key strength of this approach (see also Fratzscher, 2008aFratzscher, , 2008bFratzscher, , 2009Fratzscher and Mehl, 2009) is that it allows for a clean identification of specific and exogenous RMB shocks and to measure how they affect the rest of Asia. Our hypothesis is that if market participants consider such statements as credible, they can be expected to have a depreciating effect on the US dollar against the euro and against currencies that use the US dollar as an anchor, like those of emerging Asia.…”

Does the Clarity of Inflation Reports Affect Volatility in Financial Markets?

“…But, from a policy perspective, one would hope that the effects of clarity reach beyond the hourly or daily event horizon 10 -at least to the extent that the effects of clarity are beneficial. One example in the literature is Fratzscher (2009) who finds that G7 communication has been able to affect exchange rates for horizons up to three months.…”