The basic rules of supply and demand do not apply in the foreign exchange market.

Question

Quizplus · Accepted Answer

The foreign exchange market is subject to the laws of supply and demand like any other market. The price of one currency relative to another is determined by the supply and demand for each currency. When demand for a currency exceeds its supply, the value of the currency will increase and when the supply of a currency exceeds its demand, the value of the currency will decrease.

The Basic Rules of Supply and Demand Do Not Apply