Exchange rates, Microeconomics

EXCHANGE RATES:

The current unit focuses on exchange rates and is a more in-depth study of foreign exchange markets from the perspective of financialeconomics.You have been acquainted with balance of trade and balance of payments and variousapproaches to balance of payments. In the present unit, we get behind these theories and focus on trading of various currencies for each other. We look at foreign exchangemarkets as markets for financial assets and see who the actors in these markets are,what the mechanisms and devices for trade in these assets are, and how the pricesof these currencies are determined.

In the subsequent section we begin with a description and analysis of the workingsof foreign exchange markets. We will see that it is the biggest market for assets andround-the-clock trading takes place. In later part we explain the workings ofdifferent exchange rate regimes, particularly, fixed and flexible, but also their variants.The foreign exchange markets function under flexible exchange rate regime. We see the relative merits of the two systems and explore why many countries gave up thefixed exchange rate regime in 1973. Having explained different exchange rate regimes,we return in section 17.4 to the functioning of foreign exchange markets and explorehow exactly exchange rates (price of one currency for another) are determined in asituation of exchange rate risk, and briefly explore some strategies to deal with theserisks. Finally, we look in detail at the functioning of the exchange rate system ofIndia: how it functions, how it has changed over the years, how exchange controlswere carried out, whether total convertibility of currency is a good idea, and so on. 

Posted Date: 11/9/2012 5:51:41 AM | Location : United States







Related Discussions:- Exchange rates, Assignment Help, Ask Question on Exchange rates, Get Answer, Expert's Help, Exchange rates Discussions

Write discussion on Exchange rates
Your posts are moderated
Related Questions
Sources of monopoly power: The main sources of monopoly power include the following: (i) Control of the entire supply of a basic input . It only one firm has access to or co

Q. What do you meant by Payroll Tax? Payroll Tax:A tax which is levied on current employment or payrolls (collected either as a fixed amount per employee or as a percentage of

Question 1: ? deduce the causal factors behind technological developments in different cultures and during different periods of human history ? assess the basis of common cr

The State of Confidence in Conventional Judgements : While individuals fall back on conventions to guide their behaviour in the face of uncertainty, they are also aware that th

Aggregate Demand For Wheat The demand for U.S. wheat is comprised of domestic demand and export demand. The domestic demand for wheat can be given by the equation: -QDD =

Current Account Deficit (CAD): Boon or Bane The general belief is that high CADs are dangerous. In general, this is correct. But the converse that low CADs are good is not. A

Duality Theorems: The relationship between the direct and indirect utility functions may be described by a set of duality theorems. The following illustrative theorems are pro

Determinants of Private Demand - Ability to Pay In a developing country like India, of all the factors determining investments in education, the most important factor is the ‘

Differentiate between oscillation and damp cobweb model

equilibrium output and prince is determined in williamson model of managerial discretion ?