How a change in demand for currency may cause exchange rate

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Reference no: EM131314386

Using relevant diagrams explain:

(a) how a change in demand for a currency may cause the exchange rate of the currency against other currencies to fall

(b) how a central bank might intervene in the foreign exchange market to prevent the decline in the exchange rate

(c) why the decline in the exchange rate may initially cause a deterioration in the current account of the balance of payments.

Reference no: EM131314386

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