Namibian Foreign Exchange Market: The Degree of Sterilisation


  • Johannes Peyavali Sheefeni Sheefeni Department of Economics University of Namibia


sterilization, foreign exchange, net foreign assets, money supply, ordinary least squares, Namibia


This paper examines the size of the degree of sterilization in Namibia. The study uses the ordinary least squares method to estimate the regression based on monthly data covering the period 2000:01 to 2013:03. The variables, net foreign assets and money supply were use in the OLS estimation.  The results of this study show an almost near full sterilization with the value of 0.211. This suggests that monetary authorities do intervene in the foreign exchange markets to correct for the deviations in money stock, as this is important for monetary policy actions.



Aizenman, J. & Glick, R. (2008). Sterilization, Monetary Policy and Global Financial Integration. NBER Working Paper No. 13902.

Altinkemer, M. (1998). Capital Inflows and Central Bank’s Response. In M. Ucer (ed.) Macroeconomic Analysis of Turkey: Essays on Current Issues. The Central Bank of the Republic of Turkey Research Department Publication.

Bofinger, P. (2011). The Scope for Foreign Exchange Market Interventions. UNCTAD, Discussion Paper 204.

BON. (1990 - 2012). Annual Reports. Windhoek.

BON. (2000 – 2013). Quarterly Bulletins. Windhoek

Cumby, R. E. & Obstfeld, M. (1983). Capital Mobility and the Scope of Sterilisation: Mexico in the 1970s. In Pedro Aspe Armella, Rudiger Domrbusch, and Maurice Obstfeld (eds.) Financial Policies and the World Capital Market: The Problem of Latin American Countries. Chicago: University of Chicago Press for NBER. 245–76.

Dominguez, K. M. E. (undated). Sterilization. 1035 -1038.

Finger, K. & Reitz, S. (2012). Effectiveness of Central Bank Intervention on the Foreign Exchange Market. Kiel Policy Brief No.46.

Granger, C. W. J. & Newbold, P. (1974). Spurious Regressions in Econometrics. Journal of Econometrics, (2) 111-120.

Isberg, G. and Petursson, T. G. (2003). Central Bank interventions in Iceland’s foreign exchange market and its effect on the exchange rate of the króna. Monetary Bulletin, (1), 50 – 74.

Islam, M. S. (2009). An Economic Analysis of Bangladesh’s Foreign Exchange Reserves. ISAS Working Paper No. 85.

Jan, A., Elahi, A. & Zahid, M. A. (2005). Managing Foreign Exchange Inflows: An Analysis of Sterilization in Pakistan. The Pakistan Development Review, 44(4), 777–792.

King, M. R. (2002). Effective Foreign Exchange Intervention: Matching Strategies with Objectives. Bank of Canada.

Mussa, M. (1981). The Role of Official Intervention. Group of Thirty Occasional Papers No. 6.

Neely, C. J. (2000). Are Changes in Foreign Exchange Reserves Well Correlated with Official Intervention? The Pakistan Development Review, 42(4), 975–985.

Obstfeld, M. (1982). Can We Sterilize? Theory and Evidence. American Economic Review, 72 (2), 45–50.

Obstfeld, M. & Rogoff, K. (1996). Foundations of International Macroeconomics, Cambridge, MA: MIT Press.

Ouyang, Y. A., Rajan, R. S. & Willett, T. D. (2007). China as a Reserve Sink: The Evidence from Offset and Sterillization Coefficients. Hong Kong Institute for Monetary Research.

Qayyum, A. and Khan, A. (2003). Capital Flows and Money Supply: The Degree of Sterilisation in Pakistan, MPRA Paper No. 2150.

Sarno, L. and Taylor, M. P. (2001). Official Intervention in the Foreign Exchange Market: Is It Effective and, If So, How Does It Work? Journal of Economic Literature, 39, 839–68.

Seerattan, D. (2006). The Effectiveness of Central Bank Intervention in the Foreign Exchange Markets in Selected Flexible Exchange Rate Countries in the Caribbean. Business, Finance & Economics in Emerging Economies, 1(1), 30– 7.

Vitale, P. (1998). Sterilized Central Bank Intervention in the Foreign Exchange Market. London School of Economics.

Wu, Y. (2006). The RMB Exchange Rate and Monetary Sterilization in China. China: An International Journal 4 (1), 32-59.

Zhang, C. (2010). Sterilization in China: Effectiveness and Cost. The Wharton School, University of Pennsylvania.




How to Cite

Sheefeni, J. P. S. (2013). Namibian Foreign Exchange Market: The Degree of Sterilisation. Asian Journal of Business and Management, 1(3). Retrieved from