Sanctions and the exchange rate in time.

This article focuses on empirically testing recent theoretical models of how economic sanctions affect the exchange rate, using a newly constructed database of sanctions and exchange rates from 1914 to 1945. The study finds that different types of sanctions—import restrictions, export restrictions, trade embargoes, and asset freezes—have distinct and theoretically consistent effects on the exchange rate of targeted countries, with import restrictions leading to currency appreciation and export restrictions and asset freezes causing depreciation. The research highlights that the scale and scope of sanctions imposed on large economies during this historical period are comparable to those on contemporary Russia, making the findings relevant beyond the specific Russia–Ukraine conflict. The authors conclude that exchange rate movements reflect the nature and intensity of sanctions rather than serving as a straightforward indicator of their success or failure.