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Narrator: In the last video we saw how everyone in country A got excited about investing in country B and so they wanted to convert their currency into country Bs currency. Left to its own devices with this new demand for currency B, it would have made currency B more expensive, but instead of allowing that to happen the central bank of country B said no, no, no, no, no, I want to keep the exchange rates relatively stable, so Im going to print Bs and use those to buy up As. So at the end of that video the central bank of country B ended up with foreign currency reserves. It ended up with some of As currency on its balance sheet. What I want to do in this video is think about what if demand goes the other way and how could the central bank use its foreign currency reserves to prevent its currency from devaluing. Lets go to the next stage in our little hypothetical story here. Lets say people in A, all of this investment happened in country B, everyone was all excited. Probably a
