one of the methods used by a state to influence the national currency rate movement by means of buying and selling foreign exchange. In order to increase the rate of exchange of its own currency, the central bank sells foreign currencies in exchange for its own currency, thus artificially increasing the demand for it on foreign-exchange markets. The purchase of devisen increases the supply of national currency and lowers its rate of exchange.
The devisen policy was first used in the 19th century and was widespread in the period of general crisis of capitalism. In the 1930’s devisen policy was used by several countries (including the USA and Great Britain) to lower the rate of exchange of their own currencies in order to encourage the export of goods and acquire new foreign markets. Under present conditions, devisen policy is aimed at supporting the rates of exchange that are regulated by the International Monetary Fund (IMF) at the level of official parity. The IMF allowed deviations from official parity within the limits of ± 1 percent until 1972, when it decided to broaden the limits of deviations to ± 2.25 percent. However, under the inflationary conditions and crisis conditions in capitalist international-exchange systems, the actual deviation from parity is greater.
A precondition for the implementation of devisen policy is the availability in a country of large reserves of currency. By exerting influence on the supply and demand of currency, the bourgeois state is temporarily smoothing out fluctuations in the rates of exchange; however, it cannot remove their spontaneous basis nor delay the devaluation of currencies under conditions of an adverse balance of payments and rising inflation. Another type of devisen policy is exchange intervention, which is a policy of much greater scope for use in short periods.
Devisen policy was used briefly in the USSR during the New Economic Policy (NEP) to support the rate of exchange of chervontsy.
L. N. KRASAVINA