What does it mean when a "country intervenes in the currency market"?

[Whtwabbit]

What does it mean when a "country intervenes in the currency market"??

New Zealand intervened in the currency market last week and the $NZ dropped, does that mean NZ prints more money to devalue the $NZ?

[1715198909]

1715198909

[shawshankinmate37927]

What does it mean when a "country intervenes in the currency market"??

New Zealand intervened in the currency market last week and the $NZ dropped, does that mean NZ prints more money to devalue the $NZ?

I'd have to know more details, but New Zealand's central bank might have sold off some of the New Zealand government's debt, if they own any.  They may have just lowered interest rates, (what people are charged to borrow the money they create) which would encourage more borrowing and increase the money supply.

[Febo]

What does it mean when a "country intervenes in the currency market"??

New Zealand intervened in the currency market last week and the $NZ dropped, does that mean NZ prints more money to devalue the $NZ?

I'd have to know more details, but New Zealand's central bank might have sold off some of the New Zealand government's debt, if they own any.  They may have just lowered interest rates, (what people are charged to borrow the money they create) which would encourage more borrowing and increase the money supply.

Usually are the interest rates.

[AtheistAKASaneBrain]

I hope NZ doesnt fall in the same tricks as America and Europe, whose respective FIAT currencies are doomed.

[mestar]

What does it mean when a "country intervenes in the currency market"??

New Zealand intervened in the currency market last week and the $NZ dropped, does that mean NZ prints more money to devalue the $NZ?

Yes. 

[Traffic4u]

What does it mean when a "country intervenes in the currency market"??

New Zealand intervened in the currency market last week and the $NZ dropped, does that mean NZ prints more money to devalue the $NZ?

It usually means that they purchased massive amounts of foreign currencies in exchange for their own currency (they do this when they want to prevent their own currency from getting too strong). What happened in your example is that NZ likely sold $NZ for likely euros and dollars (the two most heavily traded currencies).

A central bank/country could also intervene to prevent their currency from getting too weak, in this scenario they would sell their foreign currency reserves for their local currency and the result would be that the local currency would increase in value

[Whtwabbit]

Would they more likely sell bonds to get the dollars for the currency swap, or would they most likely have $NZ cash on hand (from taxation etc) to buy?

[maurya78]

Usually currency mkt interventions entail the central bank either selling down its forex reserves or adding to the pile depending on what kind of px level it is looking to support in the local currency

[Miracal]

The government try to adjust economic condition. Some major tools can be considered to use, such the interested rate, bond selling or buying, selling reserve currency and injecting capital to market etc. They are trying to increase the liquidity in the market, maintain the inflation rate at low level or increase import.

[Timetwister]

That's incorrect. You should say the government, or the central bank, not the country.

[lihuajkl]

That's incorrect. You should say the government, or the central bank, not the country.

At some extent, using the country is correct. The gov or the central bank is assigned the authority to regulate the economy and issue money or fisical policy. So they represent the country.

[polynesia]

What does it mean when a "country intervenes in the currency market"??

New Zealand intervened in the currency market last week and the $NZ dropped, does that mean NZ prints more money to devalue the $NZ?

It usually means that they purchased massive amounts of foreign currencies in exchange for their own currency (they do this when they want to prevent their own currency from getting too strong). What happened in your example is that NZ likely sold $NZ for likely euros and dollars (the two most heavily traded currencies).

A central bank/country could also intervene to prevent their currency from getting too weak, in this scenario they would sell their foreign currency reserves for their local currency and the result would be that the local currency would increase in value

That is correct. Appreciation of a currency can affect exporters. It would make their exports (which are denominated in say USD) less competitive. So a central bank usually steps in (by selling / buying foreign currency) to maintain a target exchange rate.

[a447513372]

What does it mean when a "country intervenes in the currency market"??

New Zealand intervened in the currency market last week and the $NZ dropped, does that mean NZ prints more money to devalue the $NZ?

It usually means that they purchased massive amounts of foreign currencies in exchange for their own currency (they do this when they want to prevent their own currency from getting too strong). What happened in your example is that NZ likely sold $NZ for likely euros and dollars (the two most heavily traded currencies).

A central bank/country could also intervene to prevent their currency from getting too weak, in this scenario they would sell their foreign currency reserves for their local currency and the result would be that the local currency would increase in value

That is correct. Appreciation of a currency can affect exporters. It would make their exports (which are denominated in say USD) less competitive. So a central bank usually steps in (by selling / buying foreign currency) to maintain a target exchange rate.

It can also be detrimental to an economy when a currency becomes too weak so central banks will sometimes intervene to stop their local currency from falling too much. Although their ability to do this is more limited as they have a limited amount of foreign currency reserves while they essentially have a unlimited amount of foreign currency

[hodap]

What does it mean when a "country intervenes in the currency market"??

New Zealand intervened in the currency market last week and the $NZ dropped, does that mean NZ prints more money to devalue the $NZ?

Central bank can intervened the currency market by lowering the interest rate or buying up foreign currencies until the desire exchange rate.

[Meuh6879]

What does it mean when a "country intervenes in the currency market"??

they sell drug money and drug car to private action... and then, inject fresh money in the system.
in Europe and USA, they print money ... more simple, fast ... and illimited.

[renee25]

it's a devaluation war, the China did it in 2000, US did it in 2008-12 by printing, japan did it last year, the ecb did it just this summer, now new Zealand, the idea is to make the respective country more cheap to boost exports and increase demand as people buy more local products as foreign products are more expensive , since they printed.

That's why bitcoin is more like gold than currency. It's not going to be devalued. it has inflation but predictable.

[polynesia]

it's a devaluation war, the China did it in 2000, US did it in 2008-12 by printing, japan did it last year, the ecb did it just this summer, now new Zealand, the idea is to make the respective country more cheap to boost exports and increase demand as people buy more local products as foreign products are more expensive , since they printed.

That's why bitcoin is more like gold than currency. It's not going to be devalued. it has inflation but predictable.

This is one war which no country can win. If you print more currency notes and try to devalue your currency, what stops other countries from doing the same?

[Whtwabbit]

it's a devaluation war, the China did it in 2000, US did it in 2008-12 by printing, japan did it last year, the ecb did it just this summer, now new Zealand, the idea is to make the respective country more cheap to boost exports and increase demand as people buy more local products as foreign products are more expensive , since they printed.

That's why bitcoin is more like gold than currency. It's not going to be devalued. it has inflation but predictable.

This is one war which no country can win. If you print more currency notes and try to devalue your currency, what stops other countries from doing the same?

Bitcoin wins

[santaClause]

it's a devaluation war, the China did it in 2000, US did it in 2008-12 by printing, japan did it last year, the ecb did it just this summer, now new Zealand, the idea is to make the respective country more cheap to boost exports and increase demand as people buy more local products as foreign products are more expensive , since they printed.

That's why bitcoin is more like gold than currency. It's not going to be devalued. it has inflation but predictable.

This is one war which no country can win. If you print more currency notes and try to devalue your currency, what stops other countries from doing the same?

Nothing. They are doing this via QE. The result is inflation, or less deflatoin

[botany]

it's a devaluation war, the China did it in 2000, US did it in 2008-12 by printing, japan did it last year, the ecb did it just this summer, now new Zealand, the idea is to make the respective country more cheap to boost exports and increase demand as people buy more local products as foreign products are more expensive , since they printed.

That's why bitcoin is more like gold than currency. It's not going to be devalued. it has inflation but predictable.

This is one war which no country can win. If you print more currency notes and try to devalue your currency, what stops other countries from doing the same?

Nothing. They are doing this via QE. The result is inflation, or less deflatoin

Inflation in all countries (because all countries are doing the same).
Net effect - The purchasing power of people gradually decreases, but exports don't become competitive.