RakeshCristoval
Member
- Joined
- Mar 30, 2019
- Messages
- 40
- Gender
- Male
- HSC
- 2020
can someone explain this:
'If a central bank buys foreign exchange from local firms or households in exchange for domestic currency, that will increase the monetary base and money supply, causing the exchange rate to depreciate against the foreign currency.'
I dont understand why if there is an increase in money supply it will lead to a depreciation of the $AUD?
'If a central bank buys foreign exchange from local firms or households in exchange for domestic currency, that will increase the monetary base and money supply, causing the exchange rate to depreciate against the foreign currency.'
I dont understand why if there is an increase in money supply it will lead to a depreciation of the $AUD?