Question

Which of the following people would be considered buyers of US dollars in the currency exchange market?

a.A government in Africa wanting to invest in a US-based asset.

b.A person in the USA wanting to buy a US-made motorcycle

c.A person in Spain wanting to buy a souvenir from a bullfight in Madrid

d.A person in the USA wanting to acquire a loan from a US bank

e.A person in France wanting to buy a US-made airplane.

Answer 1

As we know that, Dollar is the official currency of US. Participants in Foreign exchange market can be categorized into five major groups, viz.; commercial banks, Foreign exchange brokers, Central bank, MNCs and Individuals and Small businesses.

The correct option is (d).

A person in France wanting to buy a US made airplane.

To buy the US airplane they need US dollars. The exchange rate is determined by the strength of relative currencies.

Hope you got the answer.

Kindly comment for further explanation.

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