Question: 2. (CHAPTER LN II). Mexico has a floating exchange rate system. The Mexican peso (MXP) is appreciating against the USD. The Central Bank of Mexico

2. (CHAPTER LN II). Mexico has a floating exchange rate system.

2. (CHAPTER LN II). Mexico has a floating exchange rate system. The Mexican peso (MXP) is appreciating against the USD. The Central Bank of Mexico decides to intervene to stop the appreciation of the MXP. The Central Bank of Mexico does not want to affect local interest rates. With the help of a graph, describe what the Central Bank authorities can do

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