Floating Exchange Rate Changes - Appreciations and Depreciations

[@mahajamshaid9531]

thank you for saving my life

[@Josh-tf2tb]

this guy is honestly a life saver

[@trishahk9481]

you are very good at explaining and making people understand concepts keep up the good work

[@salonikothari5409]

These are amazing! I do IGCSE Economics but a lot of the syllabus overlaps. Thank you so much! Definitely the best economics videos I've watched.

[@rubixoxo5076]

Your videos inspire me dal!❤helped me get through the toughest of times!

[@aidana9255]

Thanks a lot for making the topic so clear to understand

[@kevinkibet558]

Thanks so much mate!! 👏 Great understand=better test grades

[@jacksyder-mills]

Thank You, you're videos are very informative and an excellent guide to someone like me; beginning to learn economics.

[@vladvince4506]

Now, I understand domestic currency appreciates whenever the value of domestic goods increase. Plus, in order to purchase such goods, foreigners need to typically purchase that country’s domestic currency. This means that the demand of that currency increases when there’s an increase in quality of goods.

[@filmon1998]

perfect explanation

[@rajanmahal6965]

Cheers gaffa

[@Josiah_Harder]

I don't understand why you say the supply increases when someone exchanges the pound for another currency. Isn't there someone on the other side of that trade who is now just holding the currency you used to hold so there's no net increase in supply? What am I not understanding

[@1hourmusic588]

confused about the first point for the supply graph. if interest rates decrease, wouldnt it just decrease the demand for the pound, and cause demand to shift left, instead of supply shifting?

[@ramanujanvenkatraman8540]

The currency of a country can also appreciate if tourism is in demand for that country. For example, the US may demand Indian currency to visit India for seeing the Taj Mahal and/or other sites as well.

[@gopikanair8530]

thankyou so much for this video!! it really helped me to understand this topic!!!! :")

[@a123386]

Hi! I wonder what would lead to a shift in the supply curve to the left (i.e. how does it work?) I understand that if individuals are not confident with a currency, they would supply that currency and the S will shift to the right. But what makes an inward shift of its supply?

[@iibreathvictory]

Thank you very much 😭❤

[@RAvzz86]

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[@fowlerboy120]

Most helpful - thanks very much.

[@allyowens2825]

Great video! Could you maybe explain a little more about speculators? I'm confused on how they can have a role in appreciation or depreciation.

[@ron3799]

If people speculate that the value of a currency will go up, then there is an incentive to buy that currency NOW (which increases the value of the currency in itself) and sell it once the value has increased.

[@nickurban6201]

@@ron3799 lmao the comment was posted like 6 years ago

[@barry1269]

@@nickurban6201 its fine , i needed this lol for my gcse economics exam in 2 days

[@barry1269]

@@ron3799 thanks

[@nickurban6201]

@@barry1269 oh fair enough haha

[@IBU113T5]

SO helpful

[@Nixon_r-3]

Very well explained. Good job.

[@fariii7]

There has been an increase in supply of the pound as less people want it

[@markfrayman1533]

Such a legend, amazing video. You should get nerfed you are actually to OP

[@FreddieDW]

Why does the supply shift right when there is less of a demand for the pound e.g. through lower rates of Return ? Wouldn't demand shift left instead or ... ?

[@EconplusDal]

It can work both ways, as you said is fine. But I have mentioned it in terms of foreign investors who currently hold pounds in UK financial institutions take their money away from the UK and invest elsewhere thus increasing the supply of the pound.

[@Nokyaac]

***** sorry this is confusing me, surely if theyre taking their money away from the uk supply should fall as the change it from pounds to X currency instead of increasing supply?

[@EconplusDal]

***** Think of supply of a currency in terms of the selling of a currency. Whenever a currency is sold for another e.g. pounds sold for dollars, the supply of the pound will increase. There is more of it being sold, hence a greater quantity of pounds available in the world market

[@xPSG1]

***** So is it equally valid to shift the demand curve to the left, instead of shifting the supply curve outwards, for example when interest rates fall - leading to a depreciation?

[@ramanujanvenkatraman8540]

​@@xPSG1 I don't think so because when demand shifts to the left, the price comes down and so does quantity. But depreciation usually comes with a rise in quantity and a fall in price because foreign countries are supplying, for example, the Indian ruppee.

[@amhb2963]

THANKS VERY HELPFUL 😘

[@AlevelStudent-c1y]

Hi Sir, for depreciation, would a decrease in demand be valid as well? Or an increase in supply is a better approach

[@Philipp-rd8dv]

no

[@no-um7er]

Thankyou so much sir

[@sachsingh7591]

Got paper 2 in 1 hr begging this saves me 😭

[@wardialasad8192]

thank you very much, that was helpful

[@TheGizbones]

Thank you!

[@EconplusDal]

No worries Amy, glad to help

[@SebastianCheek]

So when the demand increases the price rises, i understand that. But the quantity also increases, what does that mean because surely the price would be the only thing that changes because the more expensive it is the less quantity you can buy and vice versa so why when the price increases can we buy more

[@jakebeanland9241]

Dal > riley

[@bipolar1989m]

i thought supply curve is solely determined by goverment? isnt the goverment the one who controls the print of the currency and therefore the supply of that currency? i could be wrong i will appreciate if you can enlighten me up a little bit

[@williambroadrick7596]

yeah wouldn't the supply curve be vertical?

[@andyc5714]

So would the depreciation of GBP in response to Brexit (economic uncertainty) be due to a decrease in supply or decrease in demand?

[@KIRAN5P]

How is a fall in demand for the pound different from an increase in the supply of the pound?

[@isaiah7640]

the supply for the pound only increases when it is used for exchange into another currency, the fall of the pound is caused when it can buy less of the other currency making it not as strong.

[@michellepun3894]

so does increasing supply, is also a decrease in demand? Im confused since the points for increasing supply is the opposite of the increase of demand?

[@omorrrahman529]

Michelle Pun always think of a cut in demand as an increase in demand, cos when the demand falls people sell of the currency which increases supply if that makes sense

[@elkantan2570]

ur amazing

[@thilinapremjayanth9372]

Please clarify to me that going GBP/USD=1.60 to GBP/USD=1.80 is a depreciation of GBP. But you have taken it as appreciation. How come?

[@bingot2386]

No because this means that the value of 1 GBP in USD increases from $1.60 to $1.80. So the value of the pound in dollars, increases. So, it's appreciation of GBP

[@venuk337]

Thanks m8

[@mishman77]

Hi, why does people wanting to exchange their pounds for another currency mean a shift to the right in supply? Surely that means a contraction in supply (because their are less pounds), as a result of a fall in demand of pounds (as people are changing their pounds into other currencies).

[@sarge7078]

Supply here is the number of people looking to sell their pounds and demand is the people looking to buy them

[@ron3799]

Why does one shift the demand but the opposite shifts the supply? Shouldn't the 'opposite' also shift the demand curve but in the other way ?

[@ron3799]

I don't see how a decrease in interest rates would increase the quantity of the pound.

[@williambonkya7053]

​@@ron3799 Have a look at some videos on “hot money flows”. When interest rates fall, investors with their money in UK banks will sell their pounds, adding to the supply of pounds in the market, and move their money elsewhere in search for highest rate of return.

[@harzzzyh845]

Is this all for the Edexcel examboard (AS)?

[@jacksyder-mills]

Therefore can speculation be seen as a self-fulfilling principle. If it is estimated that the pounds value will depreciate, overseas buyers will wait to transfer their currency because they know in the future, they'll be able to get more pounds with the same amount of their currency. On the supply side, speculators will transfer their pounds to an overseas currency (say $), in the hope that once the exchange rate has fallen, they'll be able to transfer back into pounds to make a profit on their investment. If overseas buyers wait to transfer their currency ( in that time period) demand for pounds will decrease, further depreciating its value. Whilst domestic speculators, will appreciate the value of the overseas currency by demanding it and therefore depreciate their own. Consequently, can speculators can be seen as fulfilling the path of a country's exchange rate, with their actions either further appreciating/depreciating a nations currency?

[@EconplusDal]

Absolutely, all talk about trade, foreign investment etc fuelling exchange rate appreciations/depreciations...to some extent they play a role but a very small role in comparison to what speculators can do. FOREX markets trades are multi-trillion dollar deals daily and therefore impact currency swings far more. What's happening to the Rouble currently is a good example of how destabilising speculation can be - ERM in the early 90s says the same

[@olivierishimwe135]

What is the effect of exchange rate on import??

[@sarge7078]

Why is the opposite of an increase in demand an increase in supply not a decrease in demand?

[@dr_rs789]

what does it mean when 'the exchange rate has increased'. Also great video :)

[@fahadkayani9902]

Means that the value for the currency has risen against another currency. 1£=1$, after rise in Ex. Rate, 1£=2$. Pound has risen.

[@seanyp]

When Q1->Q2, does the quantity of the currency increase?

[@danielsaunders4058]

Hyptherthetically yes

[@sarge7078]

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[@blairforrest3392]

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[@rupkatham3844]

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[@RT-rc7gs]

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[@faseehahmed8222]

@@RT-rc7gs Thanks for answering his question from 4 years ago xD

[@RT-rc7gs]

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[@faseehahmed8222]

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[@ric6383]

Many thanks!