Today, forex market intervention is hardly used in developed countries. The reasons for non-intervention are −
● Intervention is only effective when seen as preceding interest rate or other similar policy adjustments.
● Intervention has no lasting impact on the real exchange rate and thus on competitive factors for the tradable sector.
● Large-scale intervention diminishes the effectiveness of monetary policy.
● Private markets can absorb and manage enough shocks – “guiding” is unnecessary.
