Answer:
The correct answer is: sell the Chinese currency in exchange for U.S. dollars in the foreign exchange market.
Explanation:
In this regime, the Central Bank undertakes that the exchange rate will be maintained at a predetermined value. Thus, when there is excess demand for foreign exchange, the Bank supplies the market with the necessary foreign exchange to maintain the exchange rate at its default value. Similarly, when there are excess supply, the Bank acquires the currencies to prevent the exchange rate from decreasing.
