An appreciation of the domestic currency can be caused by ________.

Question

Quizplus · Accepted Answer

An increase in the domestic interest rate can lead to an appreciation of the domestic currency, as it makes domestic assets more attractive to foreign investors seeking higher returns. Additionally, the expectation of an increase in the value of the domestic currency can also lead to an appreciation. This is because investors may be willing to buy the currency in anticipation of its future increase in value, which then increases demand and drives up the currency's value.

An Appreciation of the Domestic Currency Can Be Caused by ________