Balance of payments account, Microeconomics

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Balance of payments account:

The foreign exchange market is an organizational setting within which individuals, business firms, banks etc buy and sell foreign currency. It has no centralised meeting place and not limited to one country.

A fixed exchange rate regime is where the external value a country’s currency is determined by explicit government policy and fixed at a certain amount of the domestic currency per unit of foreign currency.

Periodic changes in the exchange rate by government are described as devaluation or revaluation Devaluation refers to the deliberate reduction in the external value of a domestic currency. On the other hand, revaluation is a deliberate increase in the value of a country’s currency relative to other currencies.


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