Read the following statements carefully: Statement 1: The price of a given currency in terms of another is known as bank rate. Statement 2: Demand curve for foreign exchange is a downward sloping curve.
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The exchange rate determines currency price, not the bank rate, and the demand curve for foreign exchange slopes downward.
\text{The exchange rate, not the bank rate, defines a currency's value relative to another. The foreign exchange demand curve slopes downward; a lower price for foreign currency leads to a higher quantity demanded.}