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Old 12-07-2010, 09:00 AM
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Default How does injection of money into the economy influence the exchange rate?

As the title,how does injection of money into a country's economy influece the exchange rate of its currecy for another currency?

Detailed explanation is much appreciated.

Thank you.
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Old 12-15-2010, 11:42 AM
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Default Re: How does injection of money into the economy influence the exchange rate?

The theory is - at the most basic level - one of supply and demand.

The more there is of a product, the less demand there is for it.

The less of a product there is, the greater the perceived value.

All in an ultra-simplistic sense - but that's why a central bank suddenly printing tens and hundreds of billions of extra currency ends up diluting its value.
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