Foreign Exchange (5/8)
- buying and selling of currency
- any transaction that occurs in the BoP
- exchange rate (e) is determined in the foreign currency mrkts
- e is the price of a currency
- e is a function of the supply & demand of currency
- S↑ = e↓ ; S↓ = e↑
- D↑ = e↑ ; D↓ = e↓
- appreciation of currency - e↑
- depreciation of currency - e↓
- Consumer Taste
- Relative Income
- Relative PL
- Speculation
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