What happens to the price of a currency with lower demand?

When the demand for a currency is lower, it leads to a decrease in its price relative to other currencies. In the context of foreign exchange, demand and supply play crucial roles in determining currency value. If fewer people, investors, or businesses want to buy a particular currency, the selling pressure increases, which typically drives down its price.

For instance, if a country's economic outlook is poor or there is political instability, demand for that country's currency may diminish as investors seek more stable investments in stronger currencies. As a result, the value of the currency falls to adjust to the lower demand. This principle is fundamental to understanding how currency markets operate and the impact of demand on pricing.

Thus, when evaluating the relationship between demand and currency pricing, a decrease in demand directly correlates to a decrease in the currency's price, confirming that the correct answer is indeed that the price decreases.