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CBSE Class 12-commerce Answered

Does an increase in interest rate lead to an appreciation of domestic currency?
Asked by Topperlearning User | 19 Apr, 2016, 12:42: PM
answered-by-expert Expert Answer

Domestic interest rate increases in relation to the interest rate in rest of the world while other things remain constant. Foreigners will be induced to shift their funds to the domestic economy with the intention to make more interest earnings. High flow of funds from abroad will increase the demand for Indian rupee as the foreign currency, say dollar, has to be converted in to Indian rupee for investment. When there is an increase in demand for Indian currency, it will appreciate the currency corresponding to the foreign currency.

Answered by | 19 Apr, 2016, 02:42: PM
CBSE 12-commerce - Macroeconomics
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ANSWERED BY EXPERT ANSWERED BY EXPERT
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ANSWERED BY EXPERT ANSWERED BY EXPERT
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ANSWERED BY EXPERT ANSWERED BY EXPERT
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Asked by Topperlearning User | 19 Apr, 2016, 12:42: PM
ANSWERED BY EXPERT ANSWERED BY EXPERT
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Asked by Topperlearning User | 19 Apr, 2016, 12:42: PM
ANSWERED BY EXPERT ANSWERED BY EXPERT
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Asked by Topperlearning User | 19 Apr, 2016, 12:42: PM
ANSWERED BY EXPERT ANSWERED BY EXPERT
CBSE 12-commerce - Macroeconomics
Asked by Topperlearning User | 19 Apr, 2016, 12:42: PM
ANSWERED BY EXPERT ANSWERED BY EXPERT
CBSE 12-commerce - Macroeconomics
Asked by Topperlearning User | 19 Apr, 2016, 12:42: PM
ANSWERED BY EXPERT ANSWERED BY EXPERT
CBSE 12-commerce - Macroeconomics
Asked by Topperlearning User | 19 Apr, 2016, 12:42: PM
ANSWERED BY EXPERT ANSWERED BY EXPERT
CBSE 12-commerce - Macroeconomics
Asked by Topperlearning User | 19 Apr, 2016, 12:42: PM
ANSWERED BY EXPERT ANSWERED BY EXPERT
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