Exchange Rate Trends: This refers to how the value of the US dollar changes compared to other currencies over time. When the dollar is strong, it can buy more of other currencies; when it is weak, it buys less.
Impact of Currency Stability and Volatility on Investor Confidence: When exchange rates are stable (not changing much), investors feel safe and are more likely to invest. If the rates are very volatile (change a lot), it worries investors because they can't predict how much they will earn.
Influence of Exchange Rate on Investment Returns: A strong dollar can make it cheaper for Americans to invest overseas, but it can hurt US companies that sell products abroad because their goods become more expensive for foreign buyers. This affects the profits and returns investors get.
Government Action on Exchange Rate: The government, through its policies and actions (like setting interest rates), can influence the exchange rate. For example, if the government raises interest rates, it might attract foreign investors, strengthening the dollar.
In short, exchange rates play a significant role in how confident investors feel, how much they earn, and how government actions can shape the economy.
1 answer