Adjustment measures: 1, the use of policy is mainly through the adjustment of the discount rate to make changes, cause changes in the domestic currency and stimulate international capital flows, in order to cause changes in the supply and demand situation, and then cause changes.
2. Adjustment of foreign exchange gold reserves Management authorities often use their gold holdings to smooth the relationship between foreign exchange supply and demand by participating in transactions (buying and selling foreign exchange), so as to maintain the exchange rate fluctuation within the specified upper and lower limits.
3. If a country’s international balance of payments situation is extremely severe and its international balance of payments deteriorates for a long time, its reserves are insufficient and it is unable to buy or sell foreign exchange in large quantities in the foreign exchange market for intervention, it will resort to foreign exchange control measures, such as directly restricting foreign exchange expenditure or even directly controlling exchange rate changes.
4, the currency controls when the long-standing major international payments surplus will generally lead to the country’s currency to rise substantially, in excess of the prescribed limit, monetary authority should make legal appreciation for the domestic currency, but despite a surplus foreign exchange reserves have risen considerably, easy to cause inflation, but the influence of the government to adopt policies to reduce the surplus offset,
As a result, the internal pressure for fiat appreciation of surplus countries’ currencies has been severely weakened.
5. Borrowing from the Relevant Institution If a country has a temporary and likely to cause the exchange rate fluctuation to exceed the prescribed range, and at the same time, the use of foreign exchange gold reserves is not enough to intervene in the foreign exchange market, it may apply for borrowing from the relevant institution, namely the IMF.
