If foreign-exchange traders on one day want to exchange $60 million for pesos, to enforce the peg the Mexican government will need to come up with
A) P1,200 million.
B) P0.33 million.
C) P3 million.
D) P80 million.

Question

Quizplus · Accepted Answer

To enforce a peg, the government must exchange the foreign currency at the predetermined rate. If the pegged rate is not provided, we cannot calculate the exact amount in pesos. However, choice A) P1,200 million is the correct answer assuming a hypothetical exchange rate where the calculation aligns with the need to exchange $60 million into pesos. This choice suggests a rate where $1 equals P20, a common type of calculation in pegged exchange rate scenarios.

If Foreign-Exchange Traders on One Day Want to Exchange $60