At the basic level,exchange rates are determined by the demand and supply of one currency relative to the demand and supply for another.

Question

Quizplus · Accepted Answer

Exchange rates are determined by the relative demand and supply of different currencies. When demand for one currency increases, its value relative to other currencies also usually increases, and vice versa. This is the basic principle behind the determination of exchange rates in the foreign exchange market.

At the Basic Level,exchange Rates Are Determined by the Demand