Question

Consider the demand for Russian rublesRussian rubles in exchange for British poundsBritish pounds. Which of the following will not increase the foreign currency demand for the rubleruble​? A. Currency traders who believe that the value of the rubleruble in the future will be less than its value today. B. Foreign firms and consumers who want to buy goods and services from RussiaRussia. C. Currency traders who believe that the value of the rubleruble in the future will be greater than its value today.

Answer 1

Answer: A. Currency traders who believe that the value of the ruble in the future will be less than its value today.

Explanation:

In the foreign exchange market, currencies are traded at different prices. From the options given in the question, the correct option is option A (Currency traders who believe that the value of the rubleruble in the future will be less than its value today).

When the currency traders believe that the value of the rubel is going to depreciate in the future, they will start selling the rubels and this will lead to a decrease in the demand for it because it will depreciate. Here, the supply will increase but the demand will reduce.