If a central bank wishes to raise the foreign-exchange value of its currency, it will

Question

Quizplus · Accepted Answer

When a central bank buys domestic currency and sells foreign assets, it reduces the supply of its currency in the foreign exchange market, leading to an increase in the currency's value. This action also involves converting foreign currency into the domestic currency, further increasing demand for the domestic currency and raising its foreign-exchange value.

If a Central Bank Wishes to Raise the Foreign-Exchange Value