Question

Exchange rate forecasting is: Group of answer choices important because exchange rates influence all aspects of business. important because markets depend on solid information. unimportant because exchange rate forecasting does not have a theoretical model. No answer text provided.

Answer 1

Answer: Exchange rate forecasting is important because exchange rate influence all aspects of business.

Explanation:

Exchange rate forecast is a method that is used to predict exchange rates by collecting all the relevant factors that may affect a currency.  Exchange rate forecasting is vital because exchange rates influence all aspects of business.

The exchange rate plays a vital role for firms that import raw materials and export goods. A depreciation i.e a devaluation of the currency will make exports cheaper and therefore exporting firms will benefit. Every firm is interconnected in one way or the other, therefore exchange rate is vital.