Influence of demand in exchange rate
If exchange rate of foreign currency downs or falls, its demand rises. Describe how? Answer: If exchange rate falls, an import become cheaper, demand for imports increases and therefore increases the demand of foreign exchange to buy more imports.
If exchange rate of foreign currency downs or falls, its demand rises. Describe how?
Answer: If exchange rate falls, an import become cheaper, demand for imports increases and therefore increases the demand of foreign exchange to buy more imports.
5. What are the factors responsible for the recent surge in international portfolio investment?
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‘The country has a floating exchange rate and its inflation rate is much higher than its trading partners. Why we would suppose the country’s exchange rate to deflate?’
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