how unsterilized foreign exchange interventions work
central banks may be able to weaken a currency by selling their own reserves on the market they can also strengthen it by buying more and selling their own currency sterilization happens when authorities offset the purchase of foreign currencies or securities by selling domestic ones therefore dropping its own money supply central banks use sterilization as a way to insulate or protect their economies against any negative impact from things like currency appreciation or inflation both of which can reduce a country s place in export competitiveness in the global market sterilization can be used to insulate or protect economies against any negative impact from currency appreciation or inflation