Central banks should not defend their currencies to the point of letting their reserves get too low or their interest rates too high relative to what is good for the economy because the dangers those conditions pose are greater than the dangers of devaluation. In fact, devaluations are stimulative for the economy and markets, which is helpful during the economic contraction. The currency decline tends to cause assets to rise in value measured in that weakened currency, stimulate export sales, and help the balance of payments adjustment by bringing spending back in line with income. It also
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