Under a system of fluctuating exchange rates, a currency will depreciate if supply exceeds the demand for the currency.

Question

​Under a system of fluctuating exchange rates, a currency will depreciate if supply exceeds the demand for the currency.

Quizplus · Accepted Answer

This is because an increase in supply of a currency means there are more units of the currency available in the foreign exchange market, which will drive down the price of the currency as people will be willing to sell it at a lower price. On the other hand, if demand for a currency exceeds supply, the currency will appreciate as people will be willing to pay more for it.

​Under a System of Fluctuating Exchange Rates, a Currency Will

Under a System of Fluctuating Exchange Rates, a Currency Will