Central Bank Intervention And Exchange Rate: Toda And Yamamoto Causality Test In Algeria

The study aimed to identify the impact of central bank intervention on exchange rate by examining the causal relationship between the central bank intervention and exchange rate in Algeria. Through an empirical analysis using Toda-Yamamoto Causality upon annual data for the period 1990 to 2020. Our main results find an existence of the causal relationship between central bank intervention and exchange rate in Algeria. a unidirectional causality from central bank intervention to Algerian Dinar exchange rate/US Dollar. This suggests that the currency intervention policy in Algeria is effective and have significant impact on the dinar’s exchange rate.