The effect of speculation on exchange rate is ........

Economics- Phase (I & II) Balance of Payment and Foreign Exchange Markets

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The effect of speculation on exchange rate is

It causes violent fluctuations in exchange rate.

It aggravates the market trends.

Either or both of A and B.

Neither A nor B.

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Explanation:

When investors choose to speculate on a currency, it can affect exchange rates. For example, if investors believe a currency is about to rise in value, they may buy more of it in the hope of selling it in the future for a profit. This increase in demand can cause the exchange rate to rise.