Giving two examples,explain why there is rise in demand for a foreign

1.	Giving two examples,explain why there is rise in demand for a foreign currency when its price falls.
Answer» (i) With a fall in price of foreign exchange ,the exchange value of domestic currency increases and that of foreign currency falls and foreign goods become cheaper in relation to domestic goods.The rising domestic demand of foreign goods implies higher demand for foreign exchange. (ii) When Price of the foreign currency reduces ,tourists from home country find it cheaper to visit abroad .Accordingly ,demand for foreign currency rises.

Giving two examples,explain why there is rise in demand for a foreign currency when its price falls.

Answer»

(i) With a fall in price of foreign exchange ,the exchange value of domestic currency increases and that of foreign currency falls and foreign goods become cheaper in relation to domestic goods.The rising domestic demand of foreign goods implies higher demand for foreign exchange.

(ii) When Price of the foreign currency reduces ,tourists from home country find it cheaper to visit abroad .Accordingly ,demand for foreign currency rises.

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Giving two examples,explain why there is rise in demand for a foreign currency when its price falls.

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