Give two examples, explain why there is a rise in the demand for foreign currency when its price falls.
(a) A fall in the price of foreign currency implies that foreign goods become cheaper in relation to domestic goods. Thus, there is a increase in demand for foreign goods implying higher demand for foreign exchange.
(b) ​When the price of foreign currency falls, tourists from the home country find it cheaper to visit abroad. Thus, demand for foreign currency rises.
(b) ​When the price of foreign currency falls, tourists from the home country find it cheaper to visit abroad. Thus, demand for foreign currency rises.