0
$\begingroup$

It is said in Wikipedia, that devaluation can be done as monetary policy act.

But HOW this can be done if there is no fixed rate?

What are actual tools Central Bank can use?

One thing I can imagine -- currency intervention.

What are others?

$\endgroup$
1
$\begingroup$

A country can increase the supply of its currency, through some combination of increasing the amount of base money, or loosening the capital / reserve requirements of banks.

It can decrease interest rates.

It can decrease the supply of the currency it wants to depreciate against (for example by buying and holding lots of that currency, or equivalent instruments).

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.