A sterilized intervention will have its greatest effect on

Question

Quizplus · Accepted Answer

Sterilized interventions involve the central bank buying or selling foreign currency in exchange for domestic currency, but simultaneously offsetting this by buying or selling domestic assets to keep the domestic money supply unchanged. Therefore, it does not affect the expected domestic or foreign return directly, as it neutralizes the impact on the domestic money supply and interest rates.

A Sterilized Intervention Will Have Its Greatest Effect on