Central banks intervene in the foreign exchange market to:
A) curb speculation against the domestic currency
B) smooth out excessive fluctuations in exchange rates
C) prevent arbitrageurs from earning risk-free profit
D) provide an environment which is conducive to hedging foreign exchange risk

Question

Quizplus · Accepted Answer

The Answer of Central banks intervene in the foreign exchange market to:
A) curb speculation against the domestic currency
B) smooth out excessive fluctuations in exchange rates
C) prevent arbitrageurs from earning risk-free profit
D) provide an environment which is conducive to hedging foreign exchange risk

Central Banks Intervene in the Foreign Exchange Market To