What techniques can a central bank use to stabilize the exchange value of its currency?

A central bank, as the monetary authority, has the responsibility of managing a country's currency, money supply, and interest rates. One of their key duties is ensuring stability in the value of the currency.

There are several ways that the central bank can use to stabilize the exchange value of its currency. These include-a) Open Market Operations: Buying back the currency in exchange for foreign currency can raise the value of the currency.b) Adjustment in Interest Rate: Increasing interest rates can attract foreign investors, which will increase demand for the local currency and hence its value.c) Reserve Requirement Regulation: By altering the reserve requirements, the central bank can affect the amount of money banks can lend, thus influencing the currency's value.d) Foreign Exchange Reserves: Using foreign exchange reserves to buy and sell their own currency to influence its value. e) Setting Exchange Rates: The central bank can set the currency's value in relation to another stable currency.

In summary, a central bank can stabilize the exchange value of its currency through open market operations, adjusting interest rates, altering reserve requirements, using foreign exchange reserves, and setting exchange rates.