If the Central Bank's goal was to decrease the value of its currency, or to fight an appreciation of its currency's value on the foreign exchange market, the bank could
A) buy its own currency with foreign currency.
B) sell its own currency in exchange for foreign currency.
C) sell foreign currency.
D) do all of the above

Question

Quizplus · Accepted Answer

Selling its own currency in exchange for foreign currency would decrease the demand for its currency, thereby decreasing its value relative to other currencies. Buying its own currency with foreign currency or selling foreign currency would have little to no effect on the value of its own currency. Therefore, option B is the best choice.

If the Central Bank's Goal Was to Decrease the Value