Question
What makes an exchange rate hard to predict? Choose the correct sentence. a). Changes in the interest rate differential, which generally change the demand for
What makes an exchange rate hard to predict?
Choose the correct sentence.
a). Changes in the interest rate differential, which generally change the demand for U.S. dollars in the foreign exchange market by more than the supply, are difficult to predict because it requires predicting changes in foreign interest rates.
b). a movement away from interest rate parity sometimes influences traders to act and sometimes does not, and it is difficult to know when traders will react.
c). influences of expectations and the constant arrival of news about the influences on supply and demand, make day-to-day and week-to-week changes in the exchange rate difficult to predict.
d). changes in the expected future exchange rate generally change the supply of U.S. dollars in the foreign exchange market by more than the demand, but it is impossible to know by how much.
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