ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The depreciation of the Euro.
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The depreciation of the US dollar.
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The time at which the British resident purchases Yen.
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All of the above.
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Detailed explanation-1: -The price at which one currency is traded for another in the foreign exchange market is called the ‘foreign exchange rate’.
Detailed explanation-2: -The exchange rate affects the real economy most directly through changes in the demand for exports and imports. A real depreciation of the domestic currency makes exports more competitive abroad and imports less competitive domestically, thereby increasing demand for domestically produced goods.
Detailed explanation-3: -Currently, the XDR basket consists of the following five currencies: U.S. dollar 43.38%, euro 29.31%, renminbi (Chinese yuan) 12.28%, Japanese yen 7.59%, British pound sterling 7.44%.
Detailed explanation-4: -Interest and inflation rates. Inflation is the rate at which the cost of goods and services rises over time. Current account deficits. Government debt. Terms of trade. Economic performance. Recession. Speculation. 06-Sept-2022