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How is Foreign Exchange Rate related to Balance of Payments of a country?
Wiki User
∙ 11y ago
foreign exchange rate has wide rimpact on the balance of payent of a country.suppose their is a change in the exchange rate of a country:
case 1 - incase of devaluation there is a possibility of decrease in importables and increase in exportable items . as the price of imported items has grown while thee price of exportable items has decreased in the othe nation.
case-2 there is an appreciation in the domestic currency. it would lead to decrease in exports and incrase in imports . as imported items have become cheaper and exportebles have become quite costlier in other country. so it may lead to BOP deficit.
Wiki User
∙ 11y ago
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How does a country balance of payments affect the value of its currency?
can cause fluctuations in the exchange rate between its currency and foreign currencies.
What are the factors which influence the balance of payments of a country?
Changes in GDP ,price of domestic goods, exchange rates and direction and size of capital flows
Balance of trade?
The difference between the value of imports and exports of a country is the balance of trade. It is a country's largest component of balance of payments.
What are the disadvantages of negative balance of payment?
The disadvantage is that the country's foreign exchange would be less... The Govt, would be in loss
The difference between money coming into a country and money leaving a country is called?
balance of payments
How does a country balance of payments affect the value of its currency?
can cause fluctuations in the exchange rate between its currency and foreign currencies.
When calculating a country's balance of payments do you use foreign aid?
foreign inflation rates
Role of RBI in Foreign exchange market?
1)It helps the bank in stabilizing the external value of currency. 2)It helps in pursuing a coordinated policy towards the balance of payments situation of the country.
Balance of payments deficit?
A balance of payments deficit means there is an imbalance in the balance of payments of a country where the payments the country makes are more than the payments they received. It means the balance of payments is negative. A balance of payments deficit is,when government expenditure is more than government revenue
What are the factors which influence the balance of payments of a country?
Changes in GDP ,price of domestic goods, exchange rates and direction and size of capital flows
What is a foreign exchange?
Foreign exchange or Forex refer to exchanging one country's currency by another country's currency.
What is the foreign exchange?
Foreign exchange refer to the act of exchanging one country's currency by a different country's currency.
What are the effects of balance of payments in relation to Zimbabwe?
If your country has higher level of inflation than major trading countries, the exports will be expensive and imports will be cheaper. Country's balance of trade will be affected and ultimate effect will be on the rate of exchange.
How does Tourism Revenue affect the Balance of Payments of a national government?
A surplus in the balance of payments is when a nation has an increase in flow of funds from trade and investments coming in than paying out to other countries. Income from tourism increases the flow of funds into the economy from people of other countries. It results in the flow of foreign currency into the country and is a revenue to the country resulting in a favorable balance of payment.
Balance of trade?
The difference between the value of imports and exports of a country is the balance of trade. It is a country's largest component of balance of payments.
What is Foreign Exchange?
Currency of another country
Which country has largest stock of foreign exchange reserves in the world?
China's foreign exchange reserves is $2.13 trillion
