The demand curve for foreign exchange

Question

Quizplus · Accepted Answer

The demand curve for foreign exchange slopes downward because as the price of foreign exchange (in terms of domestic currency) decreases, the quantity demanded by domestic buyers increases, given that foreign goods become relatively cheaper. Conversely, as the price of foreign exchange increases, the quantity demanded by domestic buyers decreases. This relationship between price and quantity demanded is captured in the downward slope of the demand curve for foreign exchange.

The Demand Curve for Foreign Exchange