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Under a fixed exchange rate regime, when the domestic currency is undervalued (i.e. the actual exchange rate of the domestic currency is below the fixed

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Under a fixed exchange rate regime, when the domestic currency is undervalued (i.e. the actual exchange rate of the domestic currency is below the fixed exchange rate), the central bank must the domestic currency to keep the exchange rate fixed; as a result, it international reserves. purchase; gains O purchase; loses sell: loses sell: gains

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