Use the asset market approach to analyse the recent appreciation of the US Dollar. What is...

Use the asset market approach to analyse the recent appreciation of the US Dollar. What is your forecast of the future value of the USDollar?

Expert Solution

The emphasis of asset market approach is mainly on the financial market of the assets.This helps in determining the exchange rate in detail. According to this approach, the exchange rate changes with the change in demand and supplies of financial assets. In today's time, huge number of financial assets are exchanged between the countries. So, the appreciation and depreciation of currency is affected by the transactions of financial assets.

The recent appreciation of US Dollar states, that the US market had a favorable position in the exchange of financial assets. The favorable position has caused the appreciation of the US Dollar.

The forecast of the future value of the US Dollar is also favorable as the market is expanding and exports of US are increasing. US is the second largest exporter in the world . This states that the future value of the US Dollar would also show appreciation with time.

jeff jeffy answered 1 week ago

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