Importance of Exchange Rates in world economies
The Case for Float Exchange Rates:
- autonomy of Central Bank
- symmetry among countries
- spot rate provides a clear market signal; automatically
adjusts to "clear markets"
- market is the best mechanism for restoring equilibrium
- speculators provide stability
- free flow of capital between markets
The Case against Float Exchange Rates/
The Case for Fixed Exchange Rates
* fixed rates impose discipline on monetary policy
* reduce volatility in prices; uncertainty
* avoid costly hedging of exchange rate risk
* destabilizing speculation held in check.
* avoid exchange rate "overshooting"…
- [Afrikaans] This a Afrikaans Essay of the importance of international trade and how it effects world markets and economies.
- Borderless World
- Importance of Exchange Rates in world economies
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