The statement that 'official transactions were undertaken in the domestic money market to offset effects on liquidity of official transactions in the foreign exchange market' most closely describes:
A) immunisation of the RBA's portfolio.
B) modification of the velocity of money.
C) interest rate targeting.
D) sterilisation of foreign exchange operations.

Question

Quizplus · Accepted Answer

Sterilisation of foreign exchange operations involves conducting domestic market transactions to offset the impact of foreign exchange interventions on the money supply, maintaining monetary stability.

The Statement That 'Official Transactions Were Undertaken in the Domestic