Under a fixed exchange rate system, what action does the central bank take to raise the exchange rate?

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It sells foreign currency, causing the exchange rate to riseIt purchases foreign currency, leading to a decrease in the exchange rateIt sells foreign currency, resulting in a decline in the exchange rateIt buys foreign currency, causing the exchange rate to increaseBoth options A and B

Explanation

In a fixed exchange rate framework, the central bank sells foreign currency reserves to push the exchange rate upward. Conversely, buying foreign currency tends to lower the exchange rate. Therefore, option A correctly describes the action and its effect.