 In a fixed exchange-rate system, the pre-announced rate may not coincide with the market equilibrium exchange rate.The foreign central banks maintain reserves of foreign currencies and gold which they can sell in order to intervene in the foreign exchange market to make up the excess demand or take up the excess supply 

The demand for foreign exchange is derived from the domestic demand for foreign goods, services, and financial assets.The supply of foreign exchange is similarly derived from the foreign demand for goods, services, and financial assets coming from the home country.