Question

Short Answer Type Questions:
Give two reasons for rise in demand for a foreign currency when its price falls.

Answer 1

Two reasons for rise in demand for a foreign currency when its price falls are:

1) When a foreign currency becomes cheaper in terms of the domestic currency, it promotes tourism to that country. As a result, demand for foreign currency rises.

2) When price of a foreign currency falls, its demand rises as more people want to make gains from speculative activities.