If US dollars gets lower interest rates in the United States. How would this affect a fundamental forecast of foreign currencies? How would this affect the forward rate forecast of foreign currencies?

Which of the following statement is incorrect? O Currency crisis is more likely happen under the fixed exchange rate system. O Capital flight is more likely occur under the fixed exchange rate system. Fixed exchange rate regime relied on the ability of central banks to intervene in the currency market. O China is taking free floating exchange rate system.

During crises like the COVID-19 crisis, major currencies such as U.S. Dollar and Euro should appreciate against currencies associated with developing countries. Do you agree with this statement? Discuss. Your answer should be linked to different concepts (e.g., PPP, IRP, IFE, and currency hedging)

Which of the following is not an example of sovereign risk? a. Changes in tax rates b. Changes in currency denominations c. Changes in exchange rates d. Changes in regulations

Relative inflation rates affect interest rates, exchange rates, the overall economic health of a country, and the operations and profitability of multinational companies. Consider the following statement: If companies borrow from countries with low interest rates, the potential gains from the interest savings will likely be multiplied when the lending country's currency appreciates. Based on your understanding of the relationship between relative inflation rates and exchange rates, identify whether the preceding statement is valid or invalid. The statement is invalid, because as the currency of the lending country appreciates, it becomes more expensive for the borrowing company to repay the initial loan. The statement is valid, because as the currency of the lending country appreciates, it becomes cheaper to repay the initial loan and thus increase savings. If companies borrow from countries with low interest rates, the potential gains from the interest savings will likely be by the…

Other things being constant, if the U.S. real rate of interest exceeds that of its trading partners, we expect a. political instability in the United States. b. a worsening of the U.S. balance of payments. c. an appreciation of U.S. currency. d. that a "dirty float" will emerge.

Which of the following factors will NOT increase the value of a currency in foreign markets? A. High inflation in that country B. High interest rates in that country C. A positive balance of payments with that country D. A strong stock market rally in that country

Suppose the Japanese government pegs the yen to the U.S. dollar. What could the Japanese central bank do to prevent depreciation of the yen against the dollar in the foreign exchange market? It would lower interest rates to discourage exports to the United States. It would increase its official reserve holdings by buying dollars in the foreign exchange market. It would print new yen currency notes and exchange them for Japanese government bonds in an open market operation. It would buy yen and sell dollars in the foreign exchange market.

Foreign exchange risk may be best defined as:a. the chance of value change in foreign exchange ratesb. the chance that the demand for your currency will dropc. the chance that exchange rates will be fixedd. the political risk posed by foreign governments

A Canadian investor is considering investing in France. Use the UIP condition to explain how each of the following situation would affect the value of the euro and the Canadian dollar. a. An increase in Canadian interest rates b. A decrease in France's interest rates c. A decrease in the expected future exchange rate, Ee CAD/E