If a country's currency appreciates and its official holdings of foreign currency increase. The central bank is ________ foreign currency to limit the appreciation, and the official settlements account balance is ________.
A)buying; negative
B)selling negative
C)buying; positive
D)selling; positive
E)buying; zero

Question

Quizplus · Accepted Answer

When a country's currency appreciates, the central bank may buy foreign currency to limit the appreciation, which increases its official holdings of foreign currency. This action results in a negative official settlements account balance.

If a Country's Currency Appreciates and Its Official Holdings of Foreign