Foreign Exchange Intervention - Bank of Sierra Leone

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WAYS OF MEASURING THE 13. EFFECTIVENESS OF FOREIGN EXCHANGE INTERVENTION. The Friedman “profit test” is one way of looking at the effectiveness of foreign exchange intervention. Friedman (1953) argued that a central bank, which was stabilizing the exchange rate, would tend to buy foreign exchange when its price was low, and sell when its price was high, and hence its operations would be profitable. 24
13.(Cont’d.) Secondly, using market participant’s response to the auction (intervention) rate is another. The Auction determined rate serves as a reference rate by other foreign exchange market operators namely commercial banks, bureaus, parallel market, and others. In the light of this, to give us an indication as to how effective foreign exchange intervention by the Sierra Leone monetary authority been over the period 2000 to current, the graph in table 1 shows the comparison of Auction Rate with other exchange rates determined by other foreign exchange operators in the market. 25
Page 1 and 2: 1. THE EFFECTIVENESS OF FOREIGN EXC
Page 3 and 4: 2. FOREIGN EXCHANGE INTERVENTION De
Page 5 and 6: 3. RELEVANCE OF FOREIGN EXCHANGE RA
Page 7 and 8: 4. (Cont’d.) DEVELOPMENTS OF FORE
Page 9 and 10: 5 (Cont’d.) The latter is amenabl
Page 11 and 12: 6. (Cont’d.) WHY DO POLICYMAKERS
Page 13 and 14: THEORETICAL FRAMEWORK OF FX 8. INTE
Page 15 and 16: 8. (Cont’d.) THEORETICAL FRAMEWOR
Page 17 and 18: 10. 1. The Starting Point Review of
Page 19 and 20: 10. (Cont’d.) What if the monetar
Page 21 and 22: 11. IS FOREIGN EXCHANGE INTERVENTIO
Page 23: 12. THE EFFECTIVENESS OF FOREIGN EX

Foreign Exchange Intervention - Bank of Sierra Leone

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