Answer to Question #92146 in Macroeconomics for Abkaa

Question

Can determination of foreign exchange rate be found by change in demand or supply method i.e. without changing price? If no then why not ?

Answer 1

Yes, the determination of foreign exchange rate be found by change in demand or supply method. This is because the foreign exchange market involves firms, households, and investors who demand and supply currencies coming together through their banks and the key foreign exchange dealers (Yip, 2018).

Reference

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Yip, P. S.-L. (2018). Exchange rate systems and policies in Asia. Singapore: World Scientific.

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