Central bank's monetary measures effectively stabilize currency amidst rising foreign reserves.
The central bank in our country has been buying a lot of foreign currency to keep up with the surplus in balance of payments, which has led to an increase in foreign exchange reserves. To counteract this, the central bank has been using various measures like adjusting loan scale and savings reserve ratio. A study from 2002 to 2007 shows that these adjustments are more effective in controlling the impact of increasing foreign exchange reserves on local currency than issuing central bank notes.