say company from country A wants to invest in country B (foreign direct investment), so what currency will this company use? currency of country A or country B.
If they are using currency of country A, so foreign direct investment actually drives up exchange rate between country A and country B right~~ there will be more demand for currency of country A
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March 8th, 2010 at 3:04 am
Foreign direct investment typically takes the form of the target country’s currency. In your example, this would be currency B.
Look at it this way, what currency are the assets for sale typically denominated in?
There are of course exceptions such as homogeneous commodities which have standardised pricing in a particular currency with all other quoted prices merely spot conversions at market rates, but for the most part when people talk about FDI, it boosts the value of the domestic currency in which the assets are usually denominated in.