Which of the following is an example of a speculative attack on a currency?
A) National governments decide to engage in competitive devaluations against a given country.
B) International organizations such as the WTO and the IMF attempt to reorder the currency's system.
C) Private investors sell domestic currency and buy foreign currency, betting that the domestic currency will soon be devaluated.
D) Casinos in Las Vegas allow the proliferation of bets for and against a given currency.
E) A country is at war, and the enemy country "freezes" all the accounts denominated in the local currency.

Question

Quizplus · Accepted Answer

A speculative attack on a currency occurs when private investors sell the domestic currency and buy foreign currency, betting that the domestic currency will soon be devaluated. This could lead to a decrease in the value of the domestic currency and potentially cause a currency crisis. Options A and B refer to government or international actions, while options D and E do not relate to currency speculation.

Which of the Following Is an Example of a Speculative