Impact of Currency Appreciation on Country X's Economy

Consider a country, Country X, where the central bank has decided to adopt a target inflation rate of 2%. In the context of Country X engaging in international trade, which is heavily influenced by fluctuations in exchange rates, the government has set certain policies to react to shifts in currency value.

Assume that Country X experiences a sudden appreciation in its currency due to an influx of foreign capital. This scenario has implications for its balance of trade and inflationary pressures. Given this situation, which of the following statements correctly describes the potential impact of the currency appreciation on Country X's economy?