ECON100 Lecture Notes - Lecture 12: Foreign Exchange Market, The Foreign Exchange, Canadian Dollar
Document Summary
To buy goods and services produced in another country we need money of that country. Foreign bank notes, coins, and bank deposits are called foreign currency. The foreign exchange market is the market in which one currency of one country is exchanged for the currency of another. Nominal exchange rate is the price at which one currency exchanges for another. Like all prices, an exchange rate is determined in a market - the foreign exchange market. We will be using the exchange rate as units of foreign currency per. A fall in the value of one currency in terms of another is called currency depreciation, currency appreciation vice versa. With many traders and no restrictions, forex market is competitive. They can buy canadian assets (eg stocks, bonds, real estate) They can keep part of their money in a c$ bank account. Quantity of canadian $ traders want to buy depends on.