Is this economical statement correct?

Question

I asked how the increase in foreign exchange reserves help in cushioning the effect of inflation and he answered:

"A central's bank sale of domestic currency to buy foreign assets in the foreign exchange market results in an increase of the monetary base.

The increase in the money supply will lead to a higher real money supply in the short run which will cause the interest rate on domestic currency assets to fall shifting the demand curve to the left.

When the demand curve shifts to the left prices go down to reach a new lower equilibrium level."

I'm wondering if this statement is correct. If it is, could you please explain it to me because I honeslty got lost on this part:

"The increase in the money supply will lead to a higher real money supply in the short run which will cause the interest rate on domestic currency assets to fall shifting the demand curve to the left.

When the demand curve shifts to the left prices go down to reach a new lower equilibrium level."

Answer 1

The increase of forex reserves do help cushion the inflation.

3 ways.

Way NO 1:

1. Increase in forex meaning that there is high demand on local currency.

2. High demand in local currency will strenghten the local currency against foreign currencies.

3. E.g. If the local currency is Canadian Dollar. And the exchange against USD is CND1.00 : USD 1.00. Higher demand in Canadian dollar increases the Canadian's forex reserve as well as its' currency to CND1.00 : USD1.20

If the inflation on oil rised, say USD100 per barrel to USD120 perbarrel.

It affected US citizen. They have to pay more $20 more.  

But the Canadian still pay CND100 to get a barrel of oil.

WAY No.2.

If the CND currency does not appreciate to higher level, the Canada Central Bank may use the reserve to interfere into the market & make use of the reserve to appreciate the value of CND currency.

WAY No.3

The Canadian Central Bank may offer the government of Canada or their local importers of crude oil at an exchange rate favorable to the importers. Say for every CND 1, they give USD1.20. which will make the crude oil price/cost remain the same in Canadian Dollar.