The Effectiveness Of The Central Bank's Oral Exchange Rate Communication After The “8.11” Exchange Rate Reform

Traditionally,the actual intervention that influences the exchange rates through real currency transactions is one of the main means of central banks to intervene in their exchange rates.But in recent years,gradually replacing actual interventions,oral intervention has become the preferred strategy for monetary authorities.Especially after the mid-1990 s,monetary authorities in the developed countries such as the United States,Japan,and the European Union members rarely adopted any actual intervention in exchange rates.Instead,they use oral intervention to intervene in foreign exchange market.In this context,China's central bank,the People's Bank of China reduces the actual intervention in the RMB exchange rate step by step and increases the frequency of oral intervention.Based on daily frequency dates and monthly frequency dates,this paper uses the EGARCH model to test the short-term effectiveness of oral intervention after the “8.11” exchange rate reform in 2015.The study found that after “8.11” exchange rate reform in 2015,oral intervention can effectively promote the exchange rate to move in the direction desired by the central bank in the short term,and at the same time effectively reduce the volatility of the exchange rate and stabilize the foreign exchange market.Oral intervention is an effective exchange rate intervention tool in the process of RMB marketization.