--%>
Assignment Help - homework help

Fundamental supply and demand in foreign

Question:

Changes in currency supply and demand can be traced back to changes in fundamental supply and demand in foreign and domestic i._____________________ markets and foreign and domestic ii.________________________ markets as well as to changes in currency speculators' expectations vis-à-vis future relative value of the currency.
ii. Briefly Explain?

Answer:

The major forces determining exchange rate movements are the trade in goods and services, financial market transactions, including FDI, and the currency speculations. An increase in net exports leads to appreciation of currency, FDI or portfolio investment. Similarly, if there is speculation is that there will be an appreciation of currency, then there will be appreciation.

 

   Related Questions in Macroeconomics

  • Q : Cost of a foreign currency When cost of

    When cost of a foreign currency increases its supply too increases. Elucidate why?

    		•
  • Q : GDP gap "The economic cost of

    "The economic cost of unemployment is measured by the GDP gap." Explain this statement. ?

    		•
  • Q : Speculators actions when they are right

    When speculators are right, their actions: (1) Cause already depressed prices to drop/fall further. (2) Raise the risks to another firm of doing business. (3) Prevent price refuses from their peaks. (4) Reduce both the phase of prices and their volatility across time.

    		•
  • Q : Invesstment multiplier what can be the

    what can be the minimum value of investment multiplier?

    		•
  • Q : The Fed can control the Fed funds rate

    Question: Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have o

    		•
  • Q : Problem related to rising GDP Between

    Between 1961 and 2007, the rising share of the Canadian population in paid employment contributed to rising GDP per person. But suppose that the share of the Canadian population in paid employment had remained constant between 1961 and 2007. What would Canadian GDP pe

    		•
  • Q : Demand curves when longer periods are

    Whenever longer periods are considered and hence bigger ranges of adjustments (that is, substitutions) become probable, demand curves tend to become: (i) Flatter, and therefore do supply curves. (ii) Flatter, as supply curves become steeper. (iii) Ste

    		•
  • Q : Determinants of transaction demand.

    With the help of graph discuss the determinants of transaction demand.

    		•
  • Q : Conditions through which the supply

    What are the conditions through which the supply curve will shift?

    		•
  • Q : Define Devaluation Devaluation means

    Devaluation means decrease in the external value of a country’s currency as an aware policy measure adopted by the Government of a country. In another words, we make our currency less costly in terms of foreign currency. This builds our goods ch

    		•