Could these actions persist in the long run

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Suppose that the euro keeps appreciating against the U.S. dollar. The Fed decides to stop the euro from appreciating (e.g., same as stop the U.S. dollar from depreciating) and intervenes in the foreign exchange market.

What actions might the Fed take in the foreign exchange market? Could these actions persist in the long run? Would the Fed's actions prevent interest rate parity from being achieved? Why or why not? Explain thoroughly.

Are there any other actions that the Fed could take to raise the foreign exchange value of the dollar? Explain your answer.

Reference no: EM132284633

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