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Foreign exchange Market Intervention

currency-interventionForeign exchange market intervention is done by the primary monetary authority of the country to stabilize the domestic market.It is done by buying or selling of the currency on the foreign exchange market. Sterilized and Non-Sterilized are the two main types of foreign exchange market intervention.

 

Sterilized Intervention

Sterilized intervention is done in two different phases.In first phase central bank buys and sells the currency without changing its monetary base.In the second phase central bank operates in open bank operation is also done by buying and selling of  government securities in the countries like  United States of America.

Non-Sterilized Intervention

Non-Sterilized Intervention includes only the buying and selling of the currency  by the Central bank in the foreign exchange market.So this means that it is totally different from the Sterilized intervention,as it change the monetary base.

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About Emaad Qureshi