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Foreign Exchange Reserves, Exchange Rate and CAD
Foreign Exchange Reserves, Exchange Rate and CAD
This is how I have interpreted the economics behind forex reserves, exchange
rate and CAD: Just a brief discussion. Comments and thoughts are welcome.
The supply of foreign exchange of a given currency stems from the sale of
foreign merchandise, services, and capital to that country. When foreigners want
to buy a countrys exports, they must purchase it with currency of their own.
Thus the supply of one countrys currency available to a second country is
closely related to the demand for the second countrys currency. When the
demand schedule of a given country for a foreign currency is known, the supply
schedule of the foreign countrys exchange can be frequently derived from it.