Which statement about why exchange rates fluctuate is FALSE?
A) Increased demand for foreign currency raises the exchange rate of the exporting country.
B) Rising inflation in a country will depreciate its currency; which will make its products more attractive to its trading partners.
C) An increase in demand for foreign goods decreases domestic demand and depreciates currency.
D) If domestic interest rates rise, that country's currency may depreciate.
E) Currency speculation affects exchange rates.
C
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