Day-to-day influences on foreign exchange rates always cause rates to move in the same direction as changes in long-term market fundamentals.

Question

Quizplus · Accepted Answer

Day-to-day influences, such as news events and speculation, can cause foreign exchange rates to move in the short-term. However, in the long-term, market fundamentals such as economic growth and interest rates are the main drivers of exchange rate movements. Therefore, short-term movements may not always align with long-term fundamentals.

Day-To-Day Influences on Foreign Exchange Rates Always Cause Rates to Move