The foreign exchange market is where currencies are traded. Currencies are important because they allow us to purchase goods and services locally and across borders. International currencies need to be exchanged to conduct foreign trade and business. If you are living in the United States and want to buy cheese from France, then either you or the company from which you buy the cheese has to pay the French for the cheese in euros (EUR). This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) for euros. The same goes for traveling. A French tourist in Egypt can’t pay in euros to see the pyramids because it’s not the locally accepted currency. The tourist has to exchange the euros for the local currency, in this case the Egyptian pound, at the current exchange rate. 

Which of the following statement is NOT true?

Surplus BoP = Debit side > Credit side

The correct answer is option 1: Surplus BoP = Debit side > Credit side

Surplus balance of payment depicts a situation where the credit side of the account exceeds the debit side

Surplus BoP = Debit side < Credit side

Let's analyze each statement to determine which one is NOT true:

1. Surplus BoP = Debit side > Credit side: This statement is incorrect. A surplus in the Balance of Payments (BoP) means that the credits (inflows) are greater than the debits (outflows). Therefore, the correct relationship for a surplus BoP is: Credit side > Debit side.

2. Devaluation of currency increases the exports of the currency: This statement is generally true. Devaluation makes a country's goods cheaper for foreign buyers, which can increase exports.

3. Repayment of the loan from World Bank will be recorded on the debit side of BoP account: This statement is true. Repaying a loan from the World Bank is a capital outflow and is recorded on the debit side of the capital account in the BoP.