Explain the managed floating exchange rate regime. How can the monetary authorities prevent effects of these exchange rate regime on money supply level and why the most of the emerging countries prefer to use this policy?

Q: A country with a fixed exchange rate experiences downward pressure on the exchange rate value of its…

A: The exchange rates in financial markets are rates at which the currencies of different countries are…

Q: What can be understood from Foreign Exchange Rates?

A: Foreign exchange rate: A foreign exchange rate is the comparative value among two currencies. Merely…

Q: If US dollars gets lower interest rates in the United States. How would this affect a fundamental…

A: There are two methods to calculate the future or forward currency exchange rates - Interest rate…

Q: Give a detailed explanation of whether the following statement is true or false Call-put parity…

A: A portfolio consisting of a long put option and a short call option should be equivalent to a…

Q: The mobility of international capital flows is causing emerging market nations to choose between a…

A: Mobility of, Capital is a common phenomenon post-globalization of world Economy  The exchange rate…

Q: One proposal to stabilize the international monetary system involves setting exchange rates at their…

A: Introduction: The word purchasing power parity (PPP) means that in two separate economies or nations…

Q: A foreign exchange intervention with an offsetting open market operation (e.g. a purchase of US…

A: Foreign Exchange intervention - It is a kind of monetary policy tool where the central bank actively…

Q: Which of the following is not one of the pillars of Macroeconomic policies of the Government? a.…

A: Answer The key pillars of macroeconomic policy are: fiscal policy, monetary policy and exchange rate…

Q: what are the advantages and drawbacks for digital Technology: How It Could Transform the…

A: Digital technology is referred as an usage of an advanced communication as well as information…

Q: Which of the following is a major benefit of international lending? It eliminates exchange rate risk…

A: Lending is a form of agreement in which one party agrees to allow the other party to use a sum of…

Q: What is the difference between the concepts of surplus and trade deficit in international trade? Why…

A: International trade is necessary for any country as the resources are not in equity. Many countries…

Q: During crises like the COVID-19 crisis, major currencies such as U.S. Dollar and Euro should…

A: A currency is a method or a medium of exchange of goods and services in an economy that is used for…

Q: Explain the relative merits of fixed and floating exchange rate regimes. From the perspective of an…

A: An exchange rate regime seems to be the method through which a nation's or currency union's monetary…

Q: Explain how exchange rate fluctuations affect the return from a foreign market measured in dollar…

A: Introduction: Exchange rate is nothing but the country’s price expressed in terms of another…

Q: Fisher effect and Interest Rate Parity theories. If these theories exist, explain MNCs'…

A: There are different theories and models that help to predict the forward exchange rates based on…

Q: Critically evaluate the role of exchange rate systems in influencing FDI and trade levels.

A: Foreign direct investment:  One of the primary methods of contemporary capital internationalization,…

Q: What is the effect on a country’s economy of an artificially lowexchange rate? Of an artificially…

A: An exchange rate is the money of one country versus another country's or economic zone's currency.

Q: Foreign exchange risk

A: Foreign currency is necessary for worldwide business coordination. Foreign exchange administration…

Q: y. While such firms will enjoy improved financial planning, using a common currency in business…

A: Step 1 Doing business and investing in the eurozone is easy, cheap, and less risky if you use the…

Q: Explain why the following statement is true or false: “The smaller and less liquid markets and…

A: Currency market or foreign exchange market is defined as the global decentralized or OTC market…

Q: Discuss the condition under which exchange rate changes may actually reduce the risk of foreign…

A: Exchange rate changes are largely unpredictable. Exchange rates are nonstationary and may deviate…

Q: If a country’s par exchange rate is overvalued, what kind of intervention would that country’s…

A: The rate at which one currency can be exchanged for another is referred to as the exchange rate.…

Q: From your understanding, discuss the advantages and disadvantages of a fixed change rate regime.…

A: The fixed exchange rate regime is an exchange rate that is determined by the government and it will…

Q: Why the single currency eliminates exchange rate fluctuation and why is better for the countries to…

A: Single Currency refers to the currency used by more than one country. In other words, when more than…

Q: Because capital flows were an important element in the currency crises, it has been advocated that…

A: Capital is the main concern through which the economy of a country has financially stable and…

Q: What are the advantages or the disadvantages of hedging with currency options as opposed to future…

A: Hedging is used to insulate the investor of the risks of currency fluctuations in an international…

Q: Show the different arguments put forward by the proponents and opponents of currency hedging?

A: Following reasons are given by opponents of hedging: Managers cannot outguess the market.…

Q: How has money laundering affected internatioal trade? Answer should discuss this effect between…

A: The question is based on the concept of Financial Analysis.

Q: One proposal to stabilize the international monetary system involves setting exchange rates at…

A: The question is based on the concept of purchase power parity (PPP) theory in establishment of…

Q: Direct Intervention How can a central bank use direct intervention to change the value of a…

A: Central bank can make a direct intervention to change the value of a currency. This is achieved by…

Q: llustrate the different factors that determine future foreign exchange rates in the long run

A: The question is based on the concept of determination and determinants of foreign exchange rate  in…

Q: Explain the need for and problems associated with forecasting foreign  exchange rate

A: An exchange rate forecast indicates the expectation about future value of exchange rates at a future…

Currency Market

The currency market, also known as the foreign exchange market, consists of currencies worldwide. This market determines the rate of all currencies based on the buying and selling of forex. It is an over-the-counter market. It is the largest and most liquid market based on trade volume.