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For each of the following events, draw an exchange rate diagram and show how a shifting cu

For each of the following events, draw an exchange rate diagram and show how a shifting cu

For each of the following events, draw an exchange rate diagram and show how a shifting currency demand or supply curve causes an appreciation or depreciation of the currency: (a) An increase in interest rates in the United States relative to the rest of the world; show the impact on the US dollar and on the British pound. (b) An increase in the rate of inflation in Thailand relative to its trading partners; show the impact on the baht (Thailand’s currency) and on the ringgit (Malaysia’s currency; Malaysia is a trading partner of Thailand). Test your understanding 14.2 (c) Currency speculators believe that the euro will appreciate; show the impact on the euro. (d) Japan is in recession, and incomes are falling; show the impact on the Japanese yen. (e) China experiences an increase in tourism; show the impact on the Chinese yuan. (f) Fashion favours Indian textiles; show the impact on the Indian rupee.
Abhinav 27-Nov-2019

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