In the foreign exchange market, if Canadian companies import more products from the U.S., then the demand for Canadian dollars will increase.

Question

Quizplus · Accepted Answer

If Canadian companies import more products from the U.S., they will need to exchange Canadian dollars for U.S. dollars to pay for them. This will increase the supply of Canadian dollars in the foreign exchange market, leading to a decrease in its value relative to the U.S. dollar. Therefore, the demand for Canadian dollars will not increase, but rather the supply.

In the Foreign Exchange Market, If Canadian Companies Import More