Question

explain the effect of change in demand for and supply of foreign exchange with the help of a diagram​

Answer 1

The economics of supply and demand dictate that when demand is high, prices rise and the currency appreciates in value. In contrast, if a country imports more than it exports, there is relatively less demand for its currency, so prices should decline. In the case of currency, it depreciates or loses value.

Supply of foreign exchange comes through exports of goods and services. 2. ... The amount, which foreigners invest in the home country, increases the supply of foreign exchange.

Answer 2

Answer:

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