ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A lower-valued currency makes a country’s imports more expensive and its exports less expensive in foreign markets. A higher exchange rate can be expected to worsen a country’s balance of trade, while a lower exchange rate can be expected to improve it.

Detailed explanation-2: -The exchange rate is the price of one country’s currency with respect to another country’s currency; hence, it tells about the economic condition of the country. The forex market allows 24/7 trading, and currencies are traded in pairs, unlike stocks that can be sold or bought in solitary.

Detailed explanation-3: -Summary. 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.

Detailed explanation-4: -Currency appreciation is an increase in the value of one currency in relation to another currency. Currencies appreciate against each other for a variety of reasons, including government policy, interest rates, trade balances, and business cycles.

Detailed explanation-5: -Foreign exchange, or forex, is the conversion of one country’s currency into another. In a free economy, a country’s currency is valued according to the laws of supply and demand. In other words, a currency’s value can be pegged to another country’s currency, such as the U.S. dollar, or even to a basket of currencies.