The central banks have to intervene atimes in foreign exhange to saveguard their national currencies.
Market, if left on its own totally to determine the value of say, Naira (Nigeria'scuurency) may cause jeopardise the government efforts to strengteh the currency against its counterpart.
Essentially, fiscal and monetary control are major reasons for central banks; intervention.
Deregulation is important. However, there should be guiding laws.
2006-12-15 07:39:11
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answer #1
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answered by Bolaji O 1
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To influence or manipulate the exchange rate of their currency.
Sometimes countries want a stronger currency -- say when a 3rd world country that has a lot of debt contracts in US dollars is afraid its currency will lose value versus the dollar, making those debts harder to pay -- so they buy their own currency to stimulate its value.
Sometimes a country wants a weaker currency -- this stimulates its exports when, as a result, they are priced cheaper in other countries.
2006-12-15 09:38:37
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answer #2
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answered by KevinStud99 6
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distant places money depreciation makes imports greater expensive and, for this reason, would desire to purpose abode inflation; for this reason, a vital authority would desire to intrude to pork up the distant places money. Conversely, as interior the previous question, an appreciation would desire to scale back exports and expand imports, worsening the soundness of substitute and probably inflicting unemployment and absence of GDP, so a vital authority would desire to intrude to weaken the distant places money.
2016-10-05 08:54:12
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answer #3
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answered by ? 4
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