What is the effect on central banks foreign reserve holdings

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Suppose the central bank of a small country is faced by a rise in the world interest rate, R*. What is the effect on its foreign reserve holdings? On its money supply? Can it offset either of these effects through domestic open-market operations?

Reference no: EM13868840

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What is the effect on central banks foreign reserve holdings : What is the effect on central bank's foreign reserve holdings? On its money supply? Can it offset either of these effects through domestic open-market operations?
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