The Reserve Bank of Australia buys and sells currencies to:

Question

Quizplus · Accepted Answer

The Reserve Bank of Australia buys and sells currencies to prevent large swings in the exchange rate and to smooth the excessive fluctuations in the exchange rate. This helps maintain stability in the economy and avoids sudden shocks. However, they do not necessarily reverse any changes in the exchange rate or bring the market to a desired equilibrium, as these factors are affected by a range of other economic variables. Additionally, allowing large swings in the exchange rate may lead to volatility and uncertainty for businesses and consumers.

The Reserve Bank of Australia Buys and Sells Currencies To