If the exchange rate is higher than the Fedʹs target exchange rate, the Fed would

Question

Quizplus · Accepted Answer

If the exchange rate is higher than the Fed's target exchange rate, it means that the value of the dollar is stronger than the target level set by the Fed. To decrease the value of the dollar and bring it back to the target level, the Fed would sell dollars on the foreign exchange market. This increases the supply of dollars and reduces its value, which could lead to a decrease in the exchange rate.

If the Exchange Rate Is Higher Than the Fedʹs Target