ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Macroeconomic statistics, such as inflation, have the greatest impact on forex markets. Stock, bond, commodity, and other capital markets also have a strong influence on exchange rates. International trade numbers, such as trade deficits and surpluses, play a vital role in forex markets.

Detailed explanation-2: -In a currency war, sometimes referred to as competitive devaluation, nations devalue their currencies in order to make their own exports more attractive in markets abroad. By effectively lowering the cost of their exports, the country’s products become more appealing to overseas buyers.

Detailed explanation-3: -The foreign exchange market is decentralised and there is no organisation that controls it. However, commercial banks who act as market makers, and central banks have significant powers and can influence the market.

Detailed explanation-4: -Currency value is determined by aggregate supply and demand. Supply and demand are influenced by a number of factors, including interest rates, inflation, capital flow, and money supply. The most common method to value currency is through exchange rates. 05-Dec-2022