If a country's central bank eventually runs out of international reserves,it cannot keep its currency from depreciating and a devaluation must occur.

Question

Quizplus · Accepted Answer

International reserves are important for a country's central bank to maintain the value of its currency by intervening in the foreign exchange market. Once these reserves are depleted, the central bank has no choice but to allow the currency to depreciate, which effectively results in a devaluation.

If a Country's Central Bank Eventually Runs Out of International