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Demand curves for euros in foreign exchange market

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Reference no: EM132328588

Suppose that the euro is trading at $1.85 per euro in the foreign exchange market. Next, suppose that the exchange rate falls to $1.11 per euro, due to falling interest rates in the euro zone.

How the graph will show the supply and demand curves for euros in the foreign exchange market? On the following graph, shift either the supply curve for euros or the demand curve for euros to reflect the influence of "carry trade" (in isolation from other factors that may affect the exchange rate) on the exchange rate for euros.

Reference no: EM132328588

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