The value of a country's currency is affected by supply and demand.

true

false

The given statement is true.

Explanation:

The foreign exchange market like any other market is affected by the demand and supply forces. As the supply of a commodity increases the value of the currency decreases and if the demand for a currency increases its value decreases.

For example, US imports automobiles from Japan, Japan has to buy it in Yen and sell US dollars. The more US imports the more the US dollars enters the foreign markets.

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