Question

How is equilibrium rate of foreign exchange?

Answer 1

The exchange rate at which the supply for a currency meets the demand of the same currency. As foreign exchange rates are affected by a number of factors, the equilibrium exchange rate in turn, are also influenced by its supply and demand. Hence equilibrium is achieved when a currency's demand is equal to its supply.

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