Answer to Question #91634 in Macroeconomics for Unknown287159

Question

What factors are likely to cause an increase in the demand for british pounds (in exchange for south african rands)?[5 marks]

Answer 1

1.     The expectation that the value of the South Africa rand is going to decline.

2.     The British pound has a stronger exchange rate.

3.     Relative inflation in South Africa.

4.     Purchasing power parity of the British pound.

5.     Greater demand for British goods.

6.     Increase in interest rates.

7.     Speculation.

8.     Recession in South Africa.