Central banks influence the foreign exchange rate by only selling international reserves.1

Question

Quizplus · Accepted Answer

Central banks can influence the foreign exchange rate through a variety of measures, including adjusting interest rates, implementing monetary policies, and intervening in the foreign exchange market by buying or selling currencies. The sale of international reserves is only one possible approach to intervention, and not the only one used by central banks.

Central Banks Influence the Foreign Exchange Rate by Only Selling