Export competitiveness by devaluing currency

Reference no: EM1345206

Many Asian governments have attempted to promote their export competitiveness through holding down the values of their currencies by foreign exchange market intervention.

a. What is the likely impact of this policy on Asian foreign exchange reserves? On Asian inflation? On Asian export competitiveness? On Asian living standards?

b. Some Asian countries have attempted to sterilize their foreign exchange market intervention through selling bonds. What are the likely effects of sterilization on interest rates? on exchange rates in longer term? on export competitiveness?

Reference no: EM1345206

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