Question

Suppose that a country has a fixed exchange rate and that, over the past few years,

it has been quickly accumulating foreign reserves. What does this tell you about

the value of the pegged currency? Why?​

Answer 1

Answer:

A fixed or pegged rate is determined by the government through its central bank. The rateis set against another major world currency(such as the U.S. dollar, euro, or yen). Tomaintain its exchange rate, the government will buy and sell its own currency against thecurrency to which it is pegged.