Question

Which of the following does NOT create a demand for foreign exchange?

Options

• Imports of goods and services

• Repayment of loans taken from foreign countries

• Sending gifts and transfers abroad

• Exports of goods and services

Answer 1

Exports of goods and services bring foreign currency into the country and are a source of supply. Imports, repayment of foreign loans, and gifts sent abroad all require foreign currency and thus create demand.