If investors anticipate that the exchange value of the euro will appreciate against the dollar in the future, then the current exchange value of the euro will appreciate against the dollar.

Question

Quizplus · Accepted Answer

When investors anticipate that the exchange value of one currency (in this case, the euro) will appreciate against another currency (the dollar), they will demand more of that currency, which will cause its exchange value to appreciate in the short run. Therefore, the current exchange value of the euro will appreciate against the dollar.

If Investors Anticipate That the Exchange Value of the Euro