Giving two examples, explain the relation between rise in price of a foreign currency and its demand

cbse-class-12

#1

(i) When there is a rise in the price of foreign currency, the import gets costlier. It discourages the importers to import more and consequently, the demand for that foreign currency decreases.
(ii) When the price of a foreign currency rises, the price of foreign assets also rise. It discourages domestic people and companies to buy foreign assets and consequently, the demand for that foreign currency decreases.