BCCH Release Q&A Statement

{CL} The BCCH have released a questions and answers on their most recent announcement on international reserves.

The key point is they do not believe it to be FX intervention and their measures should allow exchange rates to reflect their true fundamentals.

Points to note:

• Increase in reserves is for future shocks, not to soften an exchange rate overreaction.
• Daily purchases fall way below previous intervention amounts of $400m. Will also sterilize the purchases by issuing 90-day bills.
• Measure will not affect long-term sovereign or corporate yields. The shorter part of the curve should also be unaffected as those yields are anchored to the monetary policy bias in their quarterly report.