If a foreign county experiences a hyperinflation,
A)its currency will depreciate against stable currencies.
B)its currency may appreciate against stable currencies.
C)its currency may be unaffected-it's difficult to say.
D)none of the options

Question

Quizplus · Accepted Answer

During a hyperinflation, the value of the currency in the affected country decreases rapidly, which means that it will depreciate against stable currencies. This is because the excessive amount of currency in circulation leads to a decrease in demand for that currency, eventually resulting in a drop in its value. As a result, the currency of the affected country may experience a significant depreciation against stable currencies such as the US dollar or the euro.

If a Foreign County Experiences a Hyperinflation