Under a fixed exchange rate system, if the dollar price of a Mexican peso is below its equilibrium level, the peso is said to be

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An undervalued currency is one whose exchange rate is lower than its equilibrium level, meaning that it is worth more in relation to foreign currencies than it should be. In this scenario, the peso would be considered undervalued because its dollar price is below its equilibrium level, meaning that it can be purchased for less dollars than it should be.

Under a Fixed Exchange Rate System, If the Dollar Price