ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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it is difficult to know which news is relevant to future exchange rates.
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it is difficult to know whether the news has been obtained legally.
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very little information is publicly available.
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None of the above
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Detailed explanation-1: -very little information is publicly available. it is difficult to know which news is relevant to future exchange rates. it is difficult to know whether the news has been obtained legally. it is difficult to know which news is relevant to future exchange rates.
Detailed explanation-2: -The three types of foreign exchange risk include transaction risk, economic risk, and translation risk. Foreign exchange risk is a major risk to consider for exporters/importers and businesses that trade in international markets.
Detailed explanation-3: -In a floating regime, exchange rates are generally determined by the market forces of supply and demand for foreign exchange. For many years, floating exchange rates have been the regime used by the world’s major currencies – that is, the US dollar, the euro area’s euro, the Japanese yen and the UK pound sterling.
Detailed explanation-4: -When foreign exchange rate rises it makes the countries imports costly. The importers have to pay a higher price in terms of domestic currency for the goods and services imported. This may reduce demand for imports.