Question about exchange rates

Reply Fri 14 Feb, 2020 05:08 pm
Hi! My question is :
When a country decides to intervene in its currency market, it can often decide to buy foreign currency (just like Japan did when they decided to stop the appreciation of the Yen). Why is it that buying foreign reserves depreciates your local currency? The way I see it, since Japan is selling its Yen, there is less Yen available and should thus be worth more.
  • Topic Stats
  • Top Replies
  • Link to this Topic
Type: Question • Score: 1 • Views: 840 • Replies: 1
No top replies

Reply Wed 8 Jul, 2020 07:44 am
When Japanese central bank starts buying foreign reserves, they will add more Japanese Yen into the market. More supply of JPY will drive the Yen to depreciate against other currencies.
Conversely, if Japan central bank starts selling foreign reserves, they will withdraw JPY out of the market. JPY supply will be reduced, it will then drive the Yen to appreciate against other currencies.
0 Replies

Related Topics

Where is the US economy headed? - Discussion by au1929
Shopping Around For Loans - Question by Brandon9000
What is greed? - Discussion by Robert Gentel
bonds series h - Question by allen russell
Naked Short Selling - Question by optimus cubed
HOW TO GET WEALTHY - Discussion by farmerman
  1. Forums
  2. » Question about exchange rates
Copyright © 2024 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.03 seconds on 04/16/2024 at 11:49:12