Question

Explain the sources of demand for foreign currency

Answer 1

Two sources of demand for foreign exchange are: (i) Imports from rest of the world. Two sources of supply offoreign currency are: (i) Exports of goods and services from domestic country to foreign country .

Answer 2

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The 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.