Which of the following influences the supply of currency in the foreign exchange market?

The balance of trade in goods and services is a primary factor influencing the supply of currency in the foreign exchange market. When a country exports more than it imports, there is an influx of foreign currency as foreign buyers purchase domestic goods and services. This increased demand for the domestic currency to pay for exports raises its supply in the foreign exchange market because businesses will convert the foreign currency they receive into their own.

Conversely, a trade deficit—where imports exceed exports—can reduce the supply of domestic currency in the foreign exchange market since local buyers need to sell their currency to purchase foreign goods, increasing demand for foreign currencies. The nature of the balance of trade directly impacts the overall supply of a country's currency, making it a crucial component in understanding shifts in the foreign exchange market.

Other factors, such as government actions, changes in consumer behavior, or political conditions, can also affect currency supply but typically do so in more indirect or secondary ways compared to the direct impact of trade balances.