How can exchange-rate targets lead to a speculativeattack on a currency?

Q: How does the government intervene in the fixed exchange rate to keep it stable? Explain your answer…

A: Fixed exchange rate A fixed exchange rate is a type of exchange rate system in which a monetary…

Q: What are foreign exchange markets? Why does the State Bank of Vietnam intervene in the foreign…

A: When economies are open to trade, they interact in international market at a specific exchange rate.

Q: Does the level of the exchange rate matter in the long run? Why or why not?

A: When a country values its currency with another country’s currency then this situation is called…

Q: What is one of the ways governments can influence exchange rates?

A: the government uses the exchange rate tool to achieve multiple objectives such as full employments,…

Q: Is monetary approach an automatic adjustment mechanism to correct a deficit in the balance of…

A: The exchange rate is the rate at which the currencies of two countries can be traded for each other.…

Q: If the Federal Reserve raises interest rates, what would happen to thepeso-dollar exchange rate in…

A: The rise in the interest rate of a country makes its investment attractive. Thus, a rise in the…

Q: Is the Eurozone an “optimal” currency area and why, critically evaluate if possible.

A: An “optimal” currency area is characterized as one in which a single currency would create the…

Q: How can an unexpected fall in exchange rates injure the financial health of a nation’s banks?

A: Exchange rate determines the price of the currency of a domestic country when it is exchanged with…

Q: What is it that determines the relationship between spot and forward foreign exchange rates?

A: The spot exchange rate is the rate at which transactions happen currently. The forward exchange rate…

Q: Does an expectation of a stronger exchange rate in the future affect the exchange rate in the…

A: The exchange rate refers to trading account that a country charges other country for the imports and…

Q: What are the main arguments presented against flexible exchange rates?

A: Answers to the question is as follows :

Q: Why does exchange rates change.

A: Foreign exchange rates are determined by supply and demand. Increased demand for British goods, for…

Q: When is exchange-rate targeting likely to be a sensiblestrategy for industrialized countries? When…

A: Under the exchange rate targeting strategy, the central bank intervenes to maintain a particular…

Q: What events can ignite a currency crisis?

A: The currency crisis refers to the situation of the foreign market where there is an unexpected or…

Q: Are international reserve needs different for different exchange rate regimes? Explain.

A: Exchange rate regime Exchange rate regime can be defined as a way through which a country manages…

Q: How does a fall in the exchange rate cause an increase in the cost of raw imported materials?

A: The import and export of a country are affected by the exchange rates.

Q: What were the implications of the 1998 Russian Financial Crisis on the exchange rate and currency…

A: The Foreign Exchange Rate is the rate at which one currency is exchanged for another. The foreign…

Q: how the value of a currency under flexible exchange rates is determined?

A: Flexible exchange rates could be defined as exchange rates being determined by global demand and…

Q: Which of the following Exchange Rate Regime allows for government intervention in the market for…

A: In flexible exchange rate, the price of the currency is determined by the forces of demand and…

Q: How do international investment activities affect exchange rates?

A: Exchange rate refers to the amount of domestic currency that requires to buy one unit fo foreign…

Q: How do changes in exchange rates affect international trade?

A: The exchange rate is determined by the demand(DD) & supply(SS) of currency. It is an important…

Q: ct international trade

A: The currency's relative volatility and valuations tend to have significant repercussions on the…

Q: What are two ways in which monetary policies and tight budgets allow a fixed exchange rate system to…

A: the AA-DD model to portray the impacts of financial, monetary, and exchange rate policy under an…

Q: Why do exchange rates matter to companies, especially those involved with the foreign direct…

A: Exchange rate (ER) tells us how much of a currency (home) is valued against the other (foreign).…

Q: How a weak currency positively affect the economy?

A: Currency refers to a medium of exchange for goods and services. It is basically money that can be…

Q: How is it necessary for a nation with a fixed exchange rate and open financial markets to renounce…

A: The rate about which one currency will be swapped for another is known as the exchange rate. The…

Q: Why does the demand for foreign currency falls when its price rises

A: According to the given question In Simple words we can that the currency which can be usually used…

Q: How does interest rate affect exchange rate?

A: Interest rates are directly linked to investment. An interest rate is the cost of borrowing to the…

Q: How does a country’s decision to fix its exchange rate to that of another nationshape the conduct of…

A: The fixed exchange rate/pegged exchange rate is the regime in which the worth of the exchange rate…