I can’t seem to get this correct or maybe I am but don’t fully understand So the demand for a currency will increase when interest rates go up, exports increase and so on. I undersand that, people are going to want more USD for higher rates and higher return. Demand Increases-> Exchange rate falls… Current rate is EUR:USD=1.5 --> 1EURO=1.5 Dollars Demand goes up–> Rate falls to EUR;USD = 1.2…Now 1 EUR–> 1.2 USD In a nutshell, when demand goes up for a currency the currency will get stronger in this case its the USD Is this correct? I get all F*** up when I see it in a problem though and supply is basically the opposite…
Yes, you got that right. When demand for USD increases it will strengthen and when the supply of USD increases it will depreciate.