Songland's Central Bank aims to stabilize the value of its currency, currently fluctuating against the Euro. If the Central Bank decides to sell Euros in the Foreign Exchange Market, what is the likely immediate effect on the value of the Songland dollar relative to the Euro, and why?

When Songland's Central Bank sells Euros in the Foreign Exchange Market, it increases the supply of Euros available for trade. As more Euros enter the market, their value tends to decrease because there are now more Euros than before. Since the value of the Songland dollar is measured against the Euro, a decrease in the value of the Euro means that the Songland dollar will appreciate, or become stronger, relative to the Euro. For example, if one Euro was previously equal to 1. 10 Songland dollars, after the Central Bank sells Euros, it might drop to 1.