The Determination of Exchange Rates in a free market
- The rate of exchange is determined by supply and demand
- When a UK citizen wishes to purchase goods from US, he supplies pounds. The higher the exchange rate the more dollars he will get for a pound
- When a US citizen wishes to purchase UK goods they supply dollars and demand pounds.
If you are going on holiday to the US it is best if there is an appreciation in Sterling so that you get more dollars for your £
Essays and Revision Notes on Exchange Rates
Exchange Rate Essays
