In order to control a capital inflow surge, a sterilized intervention operation: A. decreases a country’s monetary base. B. increases the level of short-term interest rates. C. offsets the excess liquidity created by FX intervention activities.

Yes, You are right. C is correct. In a sterilized operation, the authorities of an emerging market country would sell domestic securities to the private sector to reduce the excess liquidity created by FX intervention activities.

A CFA Level 2 Discussion About Select The Correct Option.

Add A Reply

This topic has 2 replies, 2 voices, and was last updated May-186:16 pm by doCFA.

Author

Posts
- Stuj79
  Participant
  - CFA Charterholder
  24 May 2018 at 4:07 pm
  Up
  5
  ::
  I’ll opt for C 🙂
- doCFA
  Participant
  - CFA Charterholder
  24 May 2018 at 6:16 pm
  Up
  0
  ::
  Yes, You are right.
  
  C is correct. In a sterilized
  operation, the authorities of an emerging market country would sell domestic
  securities to the private sector to reduce the excess liquidity created by FX
  intervention activities.
Author

Posts

Viewing 1 reply thread

You must be logged in to reply to this topic.