Today the U.S. dollar is worth 1.5 Canadian dollars. Because of changes in economic conditions, people come to believe that by the end of the month the U.S. dollar will be worth 1.2 Canadian dollars. This belief

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CIf people believe that the U.S. dollar will be worth less in Canadian dollars by the end of the month (from 1.5 to 1.2 Canadian dollars), they would be less inclined to hold onto U.S. dollars today, anticipating that their value in terms of Canadian dollars will decrease. This expectation decreases the demand for U.S. dollars today (B). Simultaneously, if the U.S. dollar is expected to weaken against the Canadian dollar, people would prefer holding Canadian dollars, which are expected to increase in value relative to the U.S. dollar, thus decreasing the demand for Canadian dollars today (C) is incorrect because the expectation would actually increase the demand for Canadian dollars, not decrease it. My explanation mistakenly suggested a decrease in demand for Canadian dollars, which contradicts the correct interpretation of the scenario. The correct interpretation should highlight that the expectation of a weaker U.S. dollar would make Canadian dollars more attractive, potentially increasing their demand, not decreasing it.