- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 8. Currency Exchange Rates: Understanding Equilibrium Value
- Subject 7. Exchange Rate Management: Intervention and Controls
CFA Practice Question
When dealing with significant capital inflows, an emerging country is more likely to engage in unsterilized intervention if its:
A. currency is deeply undervalued.
B. inflation rate is low.
C. interest rates are low.
Explanation: An unsterilized intervention would expand the monetary base and reduce the interest rates if inflation is not a concern.
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