Study Economics notes on Exchange Rates. Useful for revision, homework, and exam preparation in Zimbabwe.
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Exchange rates[Mr Kaybee] INTRODUCTION TO EXCHANGE RATES - Exchange Rate definition: The value of one country's currency expressed in terms of another country's currency. - Foreign Exchange Market (Forex): Where currencies are bought and sold, and exchange rates are determined. - Appreciation: An increase in a currency's value on the forex market. - Depreciation: A decrease in a currency's value. WHO DEMANDS A CURRENCY ON A FOREX MARKET? - Consumers who wish to buy imports. - Investors who wish to invest in foreign assets. - Governments and central banks. WHO SUPPLIES A CURRENCY ON A FOREX MARKET? - Foreign consumers who buy domestic goods. - Foreign investors who invest in domestic assets. - Foreign governments and central banks. REASONS FOR APPRECIATION - Increased demand for that currency on world markets. - Higher exports(buyers of these exports need it's currency to pay for those exports) - Increase interest rates by country's central bank (people will want that currency to deposit in the banks to earn that higher interest rate) - Increase of employment and or capital income in a country increase, the demand for it's goods and services increases, along with demand for that country's currency in the local market. - Loosening fiscal policy by the government (borrowing money) For a service that gives you Honour, Dignity and Comfort contact Mr Kaybee on 0718181255 (App/Call) Page 1