When Expecting a Foreign Currency to Depreciate, a Possible Way

question 12

True/False

When expecting a foreign currency to depreciate, a possible way to speculate on this movement is to borrow dollars, convert the proceeds to the foreign currency, lend in the foreign country, and use the proceeds from this investment to repay the dollar loan.

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Definitions:

Excess Supply

A situation in a market where the quantity of a good or service supplied is greater than the quantity demanded at the current price.

Market Equilibrium

A market state where the supply of a product or service is equal to the demand for it, leading to a stable price.

Excess Demand

A situation in a market where the quantity demanded of a good or service exceeds the quantity supplied at a given price, often leading to upward pressure on prices.

Excess Supply

A situation where the quantity of a good or service supplied in a market exceeds the quantity demanded at the current price.