Question : Which of the following factors does not affect foreign exchange rates?
Option 1: Inflation rates
Option 2: Interest rates
Option 3: Political stability
Option 4: Weather conditions
Correct Answer: Weather conditions
Solution : Foreign exchange rates are affected by various economic and political factors, including inflation rates, interest rates, and political stability. However, weather conditions are not directly related to foreign exchange rates. While severe weather events or natural disasters can have an impact on a country's economy, this impact is usually indirect and is mediated through other economic factors. For example, a severe hurricane may disrupt a country's oil production, which could lead to changes in inflation rates or interest rates and ultimately affect the country's exchange rate.
