A foreign exchange rate refers to the price of buying and selling commodities for future delivery.
2.An appreciation is an increase in the value of the currency whereas a depreciation is a loss in the value of the currency.
3.Basic economic theory suggests that the price of a commodity is most fundamentally determined by its supply and demand.
4.The foreign exchange markets are influenced only by economic factors and free from the effect of social or political pressures.
5.The theory of purchasing power parity suggests that in the absence of trade barriers, the price for identical products sold in different countries will be different.
6.If one country’s interest rate is high relative to other countries, the country will attract foreign funds.
7.The rise of a country's productivity is usually accompanied by increased demand for its home currency.
8.A country highly productive in manufacturing typically generates a merchandise trade deficit.
9.A country’s current account deficit can only be financed using its savings.
10.Governments adopting the floating exchange rate policy tend to set the exchange rate of a currency relative to other currencies.
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