Make use of a graph of the foreign exchange market to show how the Central Bank of Mexico can use an unsterilized intervention to increase the value of its currency, the peso, in terms of the dollar

What will be an ideal response?

An unsterilized intervention by the central bank of Mexico results in higher Mexican interest rates. As a result, the demand for pesos increases since more foreign investors will want to purchase Mexican bonds and the supply decreases as fewer Mexicans buy foreign bonds. The result is an increase in the value of the peso.