If the RBA is 'testing' the foreign exchange market, it is trying to:
A) reduce excessive fluctuations in the $A.
B) maintain the $A at its agreed fixed rate.
C) see whether movement in the value of the currency is real or speculative.
D) smooth the market.

Question

Quizplus · Accepted Answer

Testing the foreign exchange market means that the RBA is observing and analyzing the movements in the value of the currency to determine whether they are based on real economic factors or purely speculative activity. This helps them to make informed decisions about monetary policy and currency intervention. It is not directly related to reducing excessive fluctuations, maintaining a fixed rate, or smoothing the market.

If the RBA Is 'Testing' the Foreign Exchange Market, It