Theories of currency value

1.If a country’s financial markets are closed to foreign investors and the country does not permit its residents to invest in foreign markets, which theory of currency value would you rely on when trying to determine changes in the value of that country’s currency? Why?

2. If the country from the prior question opens its financial markets to foreign investors but continues to restrict foreign investment by its residents, how would you expect the value of its currency to change? Why? (Be sure to indicate which theory of currency value you are relying on for your answer.)

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1 In a scenario where a countrys financial markets are closed to foreign investors and residents can... View the full answer