what impact on Foreign Exchange Rate if import from the rest of world
Answers
Correct question :-
What impact on foreign exchange rate if import from the rest of the world increases/ decreases ? .
Answer :-
Case 1st (Increases)
→ If imports from the rest of the world increases it mean that we are using our forex reserve to purchase commodities or services from the outside world .
This will replenish our foreign exchange reserves, so the demand for foreign exchange reserve also increase .
And there is a positive relation between demand and foreign exchange rate show the foreign exchange rate also increase.
Case 2nd ( Decreases)
→ If imports from the rest of the world decrease is it means that we are decreasing our demand of foreign produced commodities or services .
This will result in decrease of demand hence the foreign exchange rate will also decrease.
Answer:
Correct question :-
What impact on foreign exchange rate if import from the rest of the world increases/ decreases ? .
Answer :-
Case 1st (Increases)
→ If imports from the rest of the world increases it mean that we are using our forex reserve to purchase commodities or services from the outside world .
This will replenish our foreign exchange reserves, so the demand for foreign exchange reserve also increase .
And there is a positive relation between demand and foreign exchange rate show the foreign exchange rate also increase.
Case 2nd ( Decreases)
→ If imports from the rest of the world decrease is it means that we are decreasing our demand of foreign produced commodities or services .
This will result in decrease of demand hence the foreign exchange rate will also decrease.
Explanation:
Hope it's helpful to you :) :)