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

Question

Quizplus · Accepted Answer

If investors anticipate that the euro will depreciate against the dollar in the future, they are likely to sell euros and buy dollars now, which increases the supply of euros and the demand for dollars, leading to a depreciation of the euro against the dollar in the current period.

If Investors Anticipate That the Exchange Value of the Euro