Economics Exchange Rates Questions
The role of exchange rates in international investment portfolios is to determine the value of investments denominated in different currencies. Fluctuations in exchange rates can impact the returns and risks associated with international investments. Investors need to consider exchange rate movements when making investment decisions, as they can affect the profitability and competitiveness of investments in different countries. Exchange rates also play a role in diversification strategies, as investing in assets denominated in different currencies can help reduce overall portfolio risk.