What determines the supply of foreign exchange in a country Class 12?
(a) Exports of Goods and Services: Supply of foreign exchange comes through exports of goods and services. (b) Tourism: The amount, which foreigners spend in the home country, increases the supply of foreign exchange.
How does an increase in a country’s exchange rate affect its balance of trade?
How does an increase in a country’s exchange rate affect its balance of trade? An increase in the exchange rate raises imports, reduces exports, and reduces the balance of trade.
What increases the supply of Canadian dollars in the foreign exchange market?
Strong oil and commodity exports increased the supply of foreign currencies on the Canadian foreign exchange market.
What are the three sources of foreign exchange in a country?
Answer: Purchases of domestic goods by the foreigners. Direct foreign investment as well as portfolio investment in home country. Speculative purchases of foreign exchange. Transfer of foreign exchange by the residents of the country abroad.
How can increase in FDI other things remaining the same affect the foreign exchange rate?
How can increase in foreign direct investment affect the price of foreign exchange? An increase in foreign direct investment leads to increase in the supply of foreign currency, thereby, the price of foreign exchange falls.
What are the major sources of foreign currency?
Three sources of supply of foreign exchange are :
- Exports: Exports of goods and services is an important source of supply of foreign exchange.
- Grants and donations from rest of the world: A significant amount of foreign exchange flows from rich to poor countries by way of grants and donations.