Question

How can persistently weak currencies be stabilized

Answer 1

The currencies of many nations have been depreciating against stronger currencies, such as dollar, euro, and yen. The governments of these countries have to make efforts to stabilize their currencies.

They should try to attract more capital flows by raising interest rates and making their currencies more attractive. In addition they should insure the bank deposits so that foreign investors who invest in large bank deposits do not have to worry about any risk. They can also impose capital restrictions on local investors in order to prevent capital outflows.