In a fixed exchange rate system, the central bank of a country will in

QUESTION

In a fixed exchange rate system, the central bank of a country will intervene in the foreign exchange market to try to maintain the value of its currency if it depreciates too rapidly against an important reference currency.

Indicate whether the statement is true or false.

ANSWER

FALSE
A dirty float (as opposed to a clean float) is called so because the central bank of a country will intervene in the foreign exchange market to try to maintain the value of its currency if it depreciates too rapidly against an important reference currency.