Question

Explain the relation between foreign exchange rate and supply of foreign exchange

Answer 1

Answer:

The supply curve [S$] is upward sloping which means that supply of foreign exchange increases as the exchange rate increases. This makes home country's goods become cheaper to foreigners since rupee is depreciating in value. The demand for our exports should therefore increase as the exchange rate increases

Explanation:

Answer 2

• equilibriumequilibrium foreign exchange rate is the rate at which demand and supply of foreign exchange at equal and a free market situation it is determined by the market for example demand and supply of foreign exchange there is an inverse relation between demand for foreign exchange and exchange rate their the district relationship between supply of foreign exchange and exchange rate due to above reason demand curve downward sloping and slope curve is upward sloping graphically intersections of demand curve and supply the determined the equilibrium of foreign exchange rate