Question

State the main sources of demand for foreign exchange.

Answer 1

1. Imports of Goods and Services: Payments made by a country to other countries for purchasing goods and services.
2. Repayment of Foreign Loans: Servicing and repayment of debts to foreign lenders.
3. Investment in Foreign Assets: Purchase of shares, bonds, or properties in other countries.
4. Tourism and Travel Abroad: Foreign currency required by residents travelling abroad.
5. Remittances to Foreign Countries: Sending money to relatives or organisations abroad.
6. Payment of Interest and Dividends: Payments made to foreign investors for their investments in the country.