Give reasons for a rise in demand for foreign currency when its price falls.

There is a rise in the demand for foreign currency when it's price decreases because now the goods and services have become cheaper. The following two examples support the answer:

a. If the price of a foreign currency decreases, an importer will be able to import goods at a cheaper price than before. This will lead to a rise in the demand for foreign currency.

b. If the price of a foreign currency decreases, the cost incurred on tourism will fall which will lead to an increase in the foreign currency.