I think there is a mistake in the following Wikipedia-article: https://en.wikipedia.org/wiki/Fixed_exchange_rate_system
at figure 2 and 3.
I think the ECB has to BUY (not sell) the dollars as in point $e$ the dollar is depreciated with respect to the bandwidth-exchange rate. So the ECB has to appreciate the dollar to the bandwidth. Hence, the ECB should increase the demand of the dollar, hence buying dollars for domestic currency euro (=buying foreign currency). So there are two possibilities:
- The text is wrong or
- The \$/€-axis should be a €/$-axis as the dollar is appreciated since the text says the ECB sells dollars (=increased dollar supply --> depreciation of dollar, less \$/€ would be appreciation)
Am I right and the article contains a mistake?
Second question: Is it correct to represent the foreign exchange market intervention in figure 2 by drawing a parallel to the blue supply line shifted to the right to build a new equilibrium with the yellow D' line within the borders? Or is the foreign exchange market intervention not represented by a straight line?