In theory, each of these tools holds out the prospect of achieving the same effect as open market operations. However, one should be mindful of the law of unintentional consequences.
Such intervention would prevent the domestic money market interest rates from falling which would attract more inflows and thus actually accentuate appreciation pressure, the problem that was sought to be contained in the first place. In the case of EMEs, intervention may also entail large quasi-fiscal costs if the domestic assets yield higher returns than the foreign exchange reserves. 8.