When the demand for foreign exchange exceeds its supply, the value of the domestic currency?

A. appreciates
B. depreciates
C. remains unchanged
D. expands

Correct Answer: Option B

B. depreciates

Explanation

If the demand for a foreign currency exceeds its supply, the exchange rate will increase. This will cause the local currency to suffer. because more of the local currency will be used to exchange for less of the foreign currency