Monetary Policy

Warning: Use of undefined constant no - assumed 'no' (this will throw an Error in a future version of PHP) in /home/austra01/public_html/overnightessays.us/wp-content/plugins/content-for-money/contentformoney.php on line 162

Monetary Policy

Effects of a one-time devaluation

Devaluation provides both opportunities and problems for governments. One effect of a one-time devaluation is to allow the central bank to replenish its foreign exchange reserves. Devaluation often happens when the fixed rate is no longer tenable.Monetary Policy However a one-time devaluation may trigger speculation among the foreign exchange market participant. When this happens, the initial devaluation may not increase its foreign exchange reserves. This is due to a myriad of factors.