A currency crisis occurs due to
A) the loss of confidence in a country's banking system.
B) heavy foreign debt obligations.
C) high levels of trade deficit.
D) a speculative attack on the exchange value.

Question

Quizplus · Accepted Answer

A currency crisis occurs when a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of the currency or forces authorities to expend large volumes of international currency reserves and sharply increase interest rates to defend the prevailing exchange rate.

A Currency Crisis Occurs Due to