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 ▸

Explain why GDP is a poor indicator of economic development, and why development is hard to measure


How should I structure IB Economics Paper 1 style questions?


Evaluate the effectiveness of Fiscal Policy in promoting economic activity during a recession.


Describe a negative externality of consumption and explain a method the government can impose to reduce it. Give examples.