Short run exchange rate movements may be explained by ______________?

Question

Quizplus · Accepted Answer

Short run exchange rate movements can be driven by a combination of the bandwagon effect (where investors follow the trend), investor expectations (which can be influenced by economic data releases or political events), and psychological factors (such as fear or optimism). Nominal interest rates can also play a role in exchange rate movements, but they may have a greater impact in the longer term.

Short Run Exchange Rate Movements May Be Explained by ______________