When a country goes to the IMF for foreign currencies to stabilize its own currency, it enages with the IMF in a(n)
A) one-time-only grant from the IMF
B) purchase-and-resale (of that currency) agreement
C) agreement concerning import controls that is administered jointly by the IMF and the country
D) exchange control agreement that is the prerogative of the IMF alone
E) agreed upon devaluation

Question

Quizplus · Accepted Answer

The correct option is B) purchase-and-resale (of that currency) agreement. When a country engages with the IMF to stabilize its own currency, it typically enters into a purchase-and-resale agreement. This means the country purchases foreign currencies from the IMF to support its own currency and agrees to resell the foreign currencies back to the IMF at a later date.

When a Country Goes to the IMF for Foreign Currencies