Effectiveness of exchange rate intervention
The effectiveness of currency interventions, particularly those conducted in the spot foreign exchange market, remains questionable. Most economists agree that long-term non-sterilized currency interventions are effective at influencing exchange rates by affecting the monetary base. Official intervention in the foreign exchange market means that the central bank or other agent of the government buys or sells foreign currency in an attempt to influence the exchange rate value. Purchases of foreign exchange usually are intended to push down the home currency value of the exchange rate, and sales usually are intended to push it up.