The forces of supply and demand determine currency prices.

Question

Quizplus · Accepted Answer

Currency prices are determined by the interaction of supply and demand in the foreign exchange market. When there is high demand for a currency, its value will increase relative to other currencies, and when there is low demand, its value will decrease. Similarly, when there is a high supply of a currency, its value will decrease, and when there is low supply, its value will increase. These market forces are influenced by a variety of factors, including economic data releases, political events, and central bank policy decisions.

The Forces of Supply and Demand Determine Currency Prices