Which of the following was NOT a reason for the appreciation of the Australian dollar between July
A) a higher interest differential in favour of the Australian dollar
B) rising commodity prices
C) improving terms of trade
D) declining inflation rate

Question

Quizplus · Accepted Answer

A higher interest differential in favor of the Australian dollar, rising commodity prices, and improving terms of trade are all factors that can lead to the appreciation of a currency. A declining inflation rate, however, does not directly cause a currency to appreciate; it might indirectly influence appreciation through monetary policy effects, but it is not a direct reason like the others.

Which of the Following Was NOT a Reason for the Appreciation