Foreign Exchange Intervention - Bank of Sierra Leone
Foreign Exchange Intervention - Bank of Sierra Leone
Foreign Exchange Intervention - Bank of Sierra Leone
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7.<br />
DRAWBACKS OF FOREIGN<br />
EXCHANGE INTERVENTION<br />
• Monetary Policy is relegated to task <strong>of</strong> exchange rate<br />
stabilization. It becomes unavailable for other primary<br />
goals (like output and inflation stabilization)<br />
• <strong>Intervention</strong> can lead to a substantial loss or accumulation<br />
<strong>of</strong> foreign currency reserves. (Total amount <strong>of</strong>fered at the<br />
<strong>Foreign</strong> <strong>Exchange</strong> Auction) = US$260,250,000.00<br />
• Unsustainable regimes may ultimately require large<br />
discreet realignments.<br />
12
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