The exchange rate between currencies of different countries is controlled primarily by ________ in currency markets.

Question

Quizplus · Accepted Answer

The exchange rate between currencies is primarily determined by supply and demand in the currency markets. When demand for a currency increases, its value goes up and its exchange rate with other currencies also increases. When demand for a currency decreases, its exchange rate decreases as well. Diplomatic relations, tariff rates, and outsourcing agreements can also have an impact on exchange rates, but they are not the primary drivers of exchange rate movements.

The Exchange Rate Between Currencies of Different Countries Is Controlled