ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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demand for foreign exchange
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supply of foreign exchange
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both
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None of the above
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Detailed explanation-1: -Direct foreign investment is a source of supply of foreign currency.
Detailed explanation-2: -Foreign direct investment FDI may be undertaken by individuals as well as business entities. Flows of FDI comprise capital provided (either directly or through other related enterprises) by a foreign direct investor to an enterprise, or capital received from an investing enterprise by a foreign direct investor.
Detailed explanation-3: -FDI or a foreign direct investment is a controlling stake (ownership) in a commercial enterprise located in a country by an entity based out of another country.
Detailed explanation-4: -1. Exports of goods and services:Supply of foreign exchange comes through exports of goods and services. 2. Foreign investment: The amount which foreigners invest in their home country increases the supply of foreign exchange.
Detailed explanation-5: -greenfield investment involves the creation of a new company or establishment of facilities abroad. mergers and acquisitions amounts to transferring the ownership of existing assets to an owner abroad.