For a country with a fixed exchange rate,foreign exchange reserves are
A) an asset of the domestic government.
B) a liability of the domestic government.
C) held by private banks.
D) are unnecessary.

Question

Quizplus · Accepted Answer

Foreign exchange reserves are assets held by the domestic government, typically by the central bank, to maintain the fixed exchange rate by intervening in the foreign exchange market.

For a Country with a Fixed Exchange Rate,foreign Exchange Reserves