Governemnt Intervention In The Currency Markets-interest Rates

Question 1

Government intervention in the currency markets- interest rates

Answer 1

An increase in interest rates is more attractive for foreign investors
This increases demand for currency, appreciating the value of the currency

Question 2

Government intervention in the currency market- quantitative easing

Answer 2

Increases supply of money and depreciates currency

Question 3

Government intervention in the currency markets- foreign currency transactions

Answer 3

Buying and selling foreign currency to manipulate domestic currency