Investor confidence in the value of a currency plays an has no role in determining its exchange rate.

Question

Quizplus · Accepted Answer

Investor confidence can have a significant impact on the demand for a currency, which can in turn affect its exchange rate. If investors have high confidence in a currency, they may be more likely to buy and hold it, which can increase its value and exchange rate. On the other hand, if investors lose confidence in a currency, they may sell it, driving down its value and exchange rate.

Investor Confidence in the Value of a Currency Plays an Has