What will be the affects of …
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Meghna Thapar 5 years ago
Foreign investment adds to supply of foreign exchange. Demand remaining unchanged, it brings downward influence on the exchange rate. An increase in FDI will increase the demand for the currency of the receiving country, and raise its exchange rate. In addition, an increase in a country's currency will lead to an improvement in its terms of trade, which are the ratio of export to import prices. (See: Terms of Trade).
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