Can the Federal Reserve sterilize its currency market interventions in the long run?

Question

Can the Federal Reserve sterilize its currency market interventions in the long run?

Answer 1

Depends on goal for such sterilization and volatility of macroeconomic trends.

If primary target is certain level of nominal exchange rate - then it potentially (only theoretically) can work in long-run (but only assuming resources of FED are unlimited), though actually still depends on feasibility of costs (central bank may end-up in depletion of reserves if there is prevailing negative trend). But another point there is what in long-run prices are not fixed, thus with fixed nominal exchange rate - real exchange rate will deviate too far away from nominal (depending on macroeconomic condition).

Interventions and sterilizations also provides easy profits opportunities for arbitrageurs.

P.S. Actually I'm not very familiar with this international monetary economics stuff, thus may be have confused some concepts.