# Exchange rate

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Exchange rate represents the external value of a currency. Changes in exchange rates may affect the relative position of a country in the international trade. Politicians and economists concern about exchange rate variability for lots of reasons, among which that the exchange rate variability discourages trade comes first. However, a large empirical literature on this issue does not confirm a significant effect of exchange rate on the volume of trade [1]. Instead other variables such as employment

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foreign exchange rate in Mauritius, a regression model is used using time series data. The Mauritius Exchange Rate Index 2 (MERI2) is used as the dependent variable while inflation rate, interest rate, government debt to GDP, terms of trade and GDP growth rate are used as independent variables in this study. The regression model used in this study is as follows: MERI2  0  1INF  2INT  3GDTGDP  4TOT  5GDP  Ut Where, MERI2 is the Mauritius Exchange Rate Index 2; INF is inflation rate; INT

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3.2 Exchange Rate Volatility measure and relative price An important issue in this topic is how to choose the appropriate technique to estimate the exchange rate volatility. However, wide variety of measures have been discussing in the literature, but there is no right or wrong measure of exchange rate volatility. Mckenzie (1999) provides a brief over-view of different methods to measure exchange rate volatility, such average absolute difference between the previous forward and current spot rate

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3. Modelling In this section, we will discuss the aspects of modelling the exchange rate volatility and trade. In particular, we briefly sketch the Gravity approach in the same spirit as Awokuse and Yuan (2003) for modelling trade relationships between Thailand and twenty-one trading partners, then we go on to outline our choice of exchange rate uncertainty measure and econometric methodology. 3.1 Theoretical model We take Gravity approach to the estimation of trade relations. According to Reinert

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THE BEHAVIOR OF EXCHANGE RATE Journal written by Robert G.Rulland from Northeastern University and Timothy S.Dauprik from Univesity of South Carolina discussed about the foreign currency translation and behaviour of exchange rate. Consequently, the first controversy is which translation method provides the most meaningful translation gains and losses, for example which method provides the most reasonable measure of the foreign entity's exposure to movements in exchange rates. The second controversy

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FIN340 304 Tutorial week 3 Questions 1. How can a central bank use direct intervention to change the value of a currency? Explain why a central bank may desire to smooth exchange rate movements of its currency.. 2. Should the governments of Asian countries allow their currencies to float freely? What would be the advantages of letting their currencies float freely? What would be the disadvantages? 3. What is the impact of a weak home currency on the home economy, other things

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countries and shares. Investing money in other countries is principally dependent on currency exchange rates. Due to fluctuating nature of Foreign Exchange Rate, forecasting of currency exchange rate has become an important factor in financial sector. By anticipating currency exchange rate investors can gain more profit into their business The main aim behind this assignment is to forecast exchange rate of USD with the help of Data Mining which will be more reliable and process efficient.

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exchange rate determination “Having endeavored to forecast exchange rates for more than half a century, I have understandably developed significant humility about my ability in this area…”[1] - Alan Greenspan Figure 1: Exchange Rate Determination [pic] Source: Exchange Rate Determination I. Short-Run Forecasting Tools Short-term changes in exchange rates are the most difficult to predict and are often determined based on bandwagon effects, overreaction to news, speculation, and

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Understanding Exchange Rates Section I - Introduction Section II - Definitions and Examples Section III - Systems and History Section IV - Government Interventions and their Effects Section V - Effects of the Exchange Rate on International Trade Relationships Section VI - Other Related International Trade Considerations Section VII - Conclusion Section I - Introduction Understanding the relationships among world currencies is vital to successful operations in a global economy. There is money

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BACK TO BASICS Why Exchange Rates? Luis A.V. Catão OW does one determine whether a currency is fundamentally undervalued or overvalued? this question lies at the core of international economics, many trade disputes, and the new IMF surveillance effort. George Soros had the answer once—in 1992—when he successfully bet \$1 billion against the pound sterling, in what turned out to be the beginning of a new era in large-scale currency speculation. Under assault by Soros and other speculators,

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