Currency traders expect the Canadian dollar to depreciate.What impact will this have on equilibrium in the foreign exchange market?

Question

Quizplus · Accepted Answer

When currency traders expect the Canadian dollar to depreciate, it influences the supply and demand in the foreign exchange market, leading to a depreciation of the Canadian dollar. However, the change in the equilibrium quantity of Canadian dollars exchanged depends on the shifts in supply and demand curves, which cannot be determined without additional information.

Currency Traders Expect the Canadian Dollar to Depreciate