Global econ midterms

Exports - effect on Exchange rates

Appreciate currency, because higher demand for good from this country means higher demand for the currency to purchase them

Imports - Effects on Exch Rate

Deppreciate currency, because citizens are demanding more foreigh goods aka more foreign currency, selling their own, and increasing their supply

FDI

Functions like imports/exports, depending on direction

Speculation

lead to higher demand if there is an expectation of an appreciation, and higher supply in expectation of depreciation

Inflation - domestically

If inflation occurs domestically, then the goods domestically will become more expensive, and importing from this country will become more expensive

inflation - abroad

When other countries are experiencing more inflation than yours, demand for your currency increases, because for them, your exports shall

Interest Rates

the higher the interest rates, the higher the demand/lower the supply for Exchange rates