Question

Currency exchange rate movements are well understood by economists and can be accurately forecast, which eliminates risk for the international seller operating with exposure outside the home currency. True or False?

Answer 1

No, the statement is false. Currency exchange rate movements are not well understood by economists and cannot be accurately forecasted, which introduces risk for international sellers operating with exposure outside their home currency.

Step-by-step explanation:

No, the statement is false. Currency exchange rate movements are not well understood by economists and cannot be accurately forecasted, which introduces risk for international sellers operating with exposure outside their home currency. Exchange rates can fluctuate significantly in response to various factors such as changes in demand and supply, inflation, and productivity growth. These fluctuations can lead to dramatic changes in profits and losses for businesses involved in international trade.