Asked by Krysteena Hudson on Jul 30, 2024
Verified
The expectations of speculators in the United States are that the exchange rate for the euro will fall in the future, will increase the supply of euros in the foreign exchange market, and decrease the exchange rate for the euros.
Foreign Exchange Market
A global marketplace for trading national currencies against one another.
Exchange Rate
The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.
- Illustrate the role of speculations and expectations in foreign exchange markets.
Verified Answer
AT
ARLANG TROYNAug 01, 2024
Final Answer :
True
Explanation :
Speculators generally expect that if there is an increase in supply of a currency, the exchange rate for that currency will decrease. Therefore, if speculators expect the exchange rate for the euro to fall in the future, they would expect an increase in supply of euros, which would decrease the exchange rate for the euros.
Learning Objectives
- Illustrate the role of speculations and expectations in foreign exchange markets.