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Question : Which of the following factors can contribute to the depreciation of a country's currency?

Option 1: Low interest rates.
   

Option 2: Weak economic performance.
 

Option 3: Political instability.

 

Option 4: All of the above.


Team Careers360 22nd Jan, 2024
Answer (1)
Team Careers360 23rd Jan, 2024

Correct Answer: All of the above.


Solution : The correct answer is d) All of the above.

All of the factors mentioned in options (a), (b), and (c) can contribute to the depreciation of a country's currency:

a) Low interest rates: When a country's interest rates are low, it can reduce the attractiveness of holding investments in that country's currency. This can lead to a decrease in demand for the currency, causing its value to depreciate.

b) Weak economic performance: If a country's economy is experiencing sluggish growth, high unemployment, or other indicators of weak performance, it can reduce investor confidence and lead to a depreciation of the currency.

c) Political instability: Political instability, such as social unrest, government instability, or policy uncertainty, can undermine investor confidence and lead to a depreciation of the currency.

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