What are causes of exchange rate fluctuations?
Causes of exchange rate fluctuations:
- short term - changes in the demand and supply of the currency in the FOREX markets. (mainly due to speculations).
- longer term - exports, imports, capital flows - that are based on differences in countries:
rates of inflation
interest rates
rates of economic growth
labour productivity
measures of international competitiveness
JR
Related Economics IB answers
All answers ▸Show how an decrease in income tax will close a deflationary gap
Explain why a perfectly competitive firm will make normal profit in the long run.
Explain the meaning of the law of demand, and using examples and diagrams, distinguish between movements along and shifts of the demand curve.
What are the characteristics of a perfectly competitive market structure?