1. When do exchange rates change?
2. What is the disadvantage of flexible rates?
Guide On Rating System
Vote
1. Exchange rates change constantly as they are influenced by various factors such as economic conditions, government policies, interest rates, inflation, market speculation, and geopolitical events. The foreign exchange market operates 24 hours a day, five days a week, causing exchange rates to fluctuate constantly.
2. The disadvantage of flexible exchange rates is that they can be highly volatile and uncertain. Rapid changes in exchange rates can create uncertainties for businesses engaging in international trade and investments. It can make it difficult for companies to plan and budget effectively, as the value of their profits, expenses, and future cash flows may be impacted by currency fluctuations. Additionally, flexible exchange rates can lead to speculative activities in the foreign exchange market, potentially destabilizing economies and causing financial crises.
Got a question with my answer?
Cheapmath.com is completely free!
Asking question is free.
Getting answers is free.
+99