To increase domestic inflows into the economy, the Central Bank can use several tools, primarily focused on influencing interest rates and the money supply. These include lowering interest rates to encourage borrowing and spending, purchasing government securities (quantitative easing) to inject liquidity, and managing foreign currency reserves to attract investment
Clear communication about future monetary policy directions can influence expectations, encouraging investment and inflows by reducing uncertainty.
By actively managing its foreign exchange reserves, the Central Bank can influence exchange rates to make domestic assets more attractive to foreign investors, thereby attracting foreign direct investment (FDI) and portfolio inflows. The Central Bank can buy government bonds and other securities from the open market to inject liquidity into the banking system. This increases the money supply, lowers long-term interest rates, and encourages lending and investment. Reducing policy rates, such as the repo rate, makes borrowing cheaper for consumers and businesses. This encourages increased borrowing, investment, and spending, which can boost economic activity and attract inflows. These tools Ayodeji Bamidele Owoeye , used judiciously, can help stimulate economic activity and enhance domestic inflows, supporting overall growth.
By actively managing its foreign exchange reserves, the Central Bank can influence exchange rates to make domestic assets more attractive to foreign investors, thereby attracting foreign direct investment (FDI) and portfolio inflows.
Stephen I. Ternyik @ Temitope Aina Victoria Owoeye , I do agree with you postions, Thank you
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