kindly answer this question
When price of a foreign currency falls, the supply of that foreign currency also falls,explain why?
Dear student,
The supply of foreign currency shares a direct relationship with the exchange rate. With a fall in the exchange rate the supply of foreign currency falls and vice-versa. A fall in the foreign exchange rate implies that domestic goods have become expensive to the foreign countries. This reduces the demand for exports. So, the supply of foreign exchange falls.
The supply of foreign currency shares a direct relationship with the exchange rate. With a fall in the exchange rate the supply of foreign currency falls and vice-versa. A fall in the foreign exchange rate implies that domestic goods have become expensive to the foreign countries. This reduces the demand for exports. So, the supply of foreign exchange falls.