Macroeconomics 11th Edition by Michael Parkin

Exercise 30

Today's exchange rate between the yuan and the U.S. dollar is 6.40 yuan per dollar and the central bank of China is buying U.S. dollars in the foreign exchange market. If the central bank of China did not purchase U.S. dollars would there be excess demand or excess supply of U.S. dollars in the foreign exchange marketWould the exchange rate remain at 6.40 yuan per U.S. dollarIf not, which currency would appreciate?