ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What drives exchange rates? Exchange rates are constantly moving, based on supply and demand. Whether one currency is in higher demand than another, depends on the perceived value of owning it, either to pay for goods and services, or as an investment.

Detailed explanation-2: -Examples of large currency moves impacting financial markets include the Asian Financial Crisis and the unwinding of the Japanese yen carry trade. Investors can benefit from a weak greenback by investing in overseas equities. A weaker dollar can boost their returns in U.S. dollar terms.

Detailed explanation-3: -Monday effect is a theory that describes market trends in which the trading pattern of Friday will continue at the opening of trade on Monday. This theory is often used in the Stock market, it shows hoe returns and prevailing patterns of a previous Friday comes up on Monday rather than any other day.

Detailed explanation-4: -A high demand for a currency or a shortage in its supply will cause an increase in price. A currency’s supply and demand are tied to a number of factors including the country’s monetary policy, the rate of inflation, and political and economic conditions.