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Design a sterilized forex market intervention aimed at devaluing our currency. Briefly explain how our central...

Design a sterilized forex market intervention aimed at devaluing our currency. Briefly explain how our central bank would implement this.

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ANSWER:-

  • To devalue currency, the central bank will purchase remote currency denonminayed securities expanding supply if residential currency.
  • This will prompt currency devaluation however as Central bank has expanded supply of local currency, in this way, it needs to decrease currency gracefully inside the economy to keep te fiscal base unaltered.
  • For this central bank can utilize open market deals which is offer of government protections prompting decline in financial base which balances the expansion in currency related base because of remote trade mediation for devaluation of the currency.

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