Question
When a central bank of a country intervenes in the FX market and tries to artificially prop-up the value of its currency, i.e. artificially increase
When a central bank of a country intervenes in the FX market and tries to artificially prop-up the value of its currency, i.e. artificially increase the value of its currency then
It can do so by selling off its domestic currency. This strategy generally leads to an increase in the countrys FX reserves.
It can do so by buying up its domestic currency. Generally this leads to an increase in the countrys FX reserves.
It can do so by selling off its domestic currency. This strategy generally leads to a decrease in the countrys FX reserves
It can do so by buying up its domestic currency. Generally this leads to a decrease in the countrys FX reserves.
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