The asset market approach to exchange rate determination seeks to predict:
A)the forward exchange rate premiums.
B)the long-run trends in exchange rates.
C)the possibility of retaining a pegged exchange rate by the government.
D)the short-term pressures on exchange rates.

Question

Quizplus · Accepted Answer

The asset market approach focuses on short-term factors such as interest rates and investor expectations, which influence immediate exchange rate movements.

The Asset Market Approach to Exchange Rate Determination Seeks to Predict