Assume that the dollar has been consistently appreciating over a long period. The fed decides to counteract this movement by intervening in the foreign exchange market using nonsterilized intervention. The fed would:.

Respuesta :

As the dollar have been appreciating over a long period. the fed can counteract the trend in the foreign exchange market by:

  • buying dollars with foreign currency
  • buying Treasury securities with dollars.

What is the function of the Feds?

Feds means Federal reserves. Some of the main function of the Federal reserves includes:

  • conducting national monetary policy
  • supervising and regulating banks
  • maintaining financial stability etc

In conclusion, the counteractive action that includes buying dollars with foreign currency and buying treasury securities with dollars will help control the over-appreciation of the dollar value.

Read more about Federal reserves

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