A country wishing for its currency to fall in value, particularly when confronted with a continual appreciation of its value against major trading partner currencies, the central bank may work to lower real interest rates, reducing the returns to capital.

Question

Quizplus · Accepted Answer

By lowering real interest rates, the central bank encourages borrowing and spending, which in turn can help weaken the currency's value. This is a commonly used tactic known as monetary policy intervention.

A Country Wishing for Its Currency to Fall in Value