The forces of supply and demand play no role in determining rates of exchange and currency prices.

Question

Quizplus · Accepted Answer

The forces of supply and demand play a significant role in determining rates of exchange and currency prices. The demand for a currency will increase when there are more people willing to buy that currency, and the supply of the currency will decrease when there are fewer sellers willing to sell it. This increase in demand and decrease in supply will cause the price of the currency to rise. Conversely, if there is a decrease in demand for a currency or an increase in the supply of the currency, the price will fall. Therefore, supply and demand are important factors in determining rates of exchange and currency prices.

The Forces of Supply and Demand Play No Role in Determining