How and why might a central bank “intervene” on a foreign exchange market?

Microeconomics
13th Edition
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter21: International Finance
Section21.2: Flexible Exchange Rate
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How and why might a central bank “intervene” on a foreign exchange market?

 

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A central bank’s intervention in the foreign exchange market is a monetary policy tool. Such interventions play an active role in determining the value of the domestic currency.

 

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