Question

State any two factors responsible for inflow of foreign currency.

Answer 1

Answer:

Another important factor influencing the exchange rate is the interest rate in a country relative to interest rate of other countries with which it trades its goods. Suppose there are no restrictions imposed by the Governments on the flow of capital funds between the countries.

Explanation:

Answer 2

Answer:

(i) foreigners purchasing home country goods and services through exports.

(ii) Foreigners investment in home country through joint ventures and through financial market operation.

(iii) Foreign currencies flow into the economy due to currency dealers and speculators.

Explanation:

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