Major supply shocks affect exchange rates when oil-exporting countries suddenly announce a decrease in the supply of oil. In addition to forecasting such events, managers must assess the likely actions of foreign-exchange traders.

Question

Quizplus · Accepted Answer

Major supply shocks, such as a sudden decrease in the supply of oil by oil-exporting countries, can affect exchange rates because they impact the global economic outlook, influencing traders' expectations and actions in the foreign exchange market.

Major Supply Shocks Affect Exchange Rates When Oil-Exporting Countries Suddenly