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
The prevention of major swings in economic activity can be handled most easily by the

If a person literally had “nothing else to do,” (a) What would be the opportunity cost of doing this homework?



Problem: i) What do you meant by the term ‘economic efficiency'? ii) By using appropriate examples differentiate between fixed and variable costs. iii) Consider different

Determinants of Social Demand for Education - Excellence Apart from the three considerations identified by Prof. Musgrave for public investments in education and discussed abo

#queA monopolist has a constant marginal and average cost of $10 and faces a demand curve Of Qd = 1000-10P. Marginal revenue is given by MR= 1000-1/5Q. stion..


Answer in True or Flees 1.  "Revealed preference methods for valuing environmental services and goods (for example hedonic price method, travel cost model, etc.) can reveal non-

Policies of Educational Financing - Earmarking Earmarking refers to setting aside and using the funds generated by a special cess/tax for the particular purpose for which it i