Q. The term Heated Currency in the forex market is best understood as a reference to:

[A] A domestic currency that is experiencing immense appreciation pressure due to large, persistent inflows of foreign direct investment (FDI).

[B] A domestic currency that is under significant depreciation pressure due to a high tendency of a hard currency to exit the economy.

[C] A foreign currency that is being heavily traded in derivative markets, causing volatility.

[D] A currency whose exchange rate has been deliberately inflated by its central bank to boost the national image.

Answer: B
Notes:

Explanation:

Heated currency is a term used in the forex market to denote the domestic currency which is under enough pressure (heat) of depreciation. This pressure is typically caused by a hard currency high tendency of exiting the economy (since it has become hot). It is also known as currency under heat or under hammering26.

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