Foreign exchange market intervention is most likely to stabilize exchange rates if:

Question

Quizplus · Accepted Answer

Foreign exchange market intervention is most effective in stabilizing exchange rates when the changes in those rates are due to short-term fluctuations rather than fundamental long-term shifts in the economy. This is because interventions can smooth out temporary volatility without altering the underlying economic conditions that determine the long-term equilibrium exchange rate.

Foreign Exchange Market Intervention Is Most Likely to Stabilize Exchange