Sterilization to stem appreciation involves the issuance of domestic securities to mop up the liquidity created by foreign exchange purchases, which requires that the central bank must have a sufficient quantum of securities at its disposal for this purpose.
This would have eventually curtailed the short-term inflows that result when a fixed exchange rate tries to co-exist with a positive interest differential. But what we do not know is how high the exchange rate would have needed to rise in the process and the extent to which this would have added to the economic difficulties.