Explain why you agree or disagree with each of the following statements: i)        “A nation’s currency will depreciate if its inflation rate is less than that of its trading partners.” ii)       “A nation whose interest rate falls more rapidly than that of other nations can expect the exchange value of its currency to depreciate.” iii)      “A nation that experiences higher growth rates in productivity than its trading partners can expect the exchange value of its currency to appreciate.”

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Currency Market

The currency market, also known as the foreign exchange market, consists of currencies worldwide. This market determines the rate of all currencies based on the buying and selling of forex. It is an over-the-counter market. It is the largest and most liquid market based on trade volume.