Fixed Exchange Rates
Definition of a Fixed Exchange Rate: This occurs when the government seeks to keep the value of a currency fixed against another currency. e.g. the value of the Pound is fixed at £1 = €1.1
Semi Fixed Exchange Rate. This occurs when the government seeks to keep the value of a currency between a band of exchange rate. In other words, the exchange rate can fluctuate within a narrow band.
E.g. the Pound Sterling could fluctuate between a target exchange rate of £1 = €1.1 and £1 = €1.2
Definition of a Floating Exchange Rate: this is when the govt does not intervene in the foreign exchange market but allowss market forces to determine the level of a currency.
· Exchange Rate Mechanism ERM. This was a semi fixed exchange rate where EU countries sought to keep their currencies fixed within certain bands against the D-Mark. The ERM was the forerunner of the Euro
Essays and Revision Notes on Exchange Rates
- Exchange Rates revision notes and essays
- Factors influencing exchange rates
- Determination of exchange rates in free markets
- Effects of Appreciation
- Effects of Depreciation
- Government Int
- Fixed Exchange Rates
- International Trade Revision Notes
- Globalisation Essays
Exchange Rate Essays
- Effects of a falling Dollar
- Why Dollar keeps falling
- Discuss Policies to Stop the Dollar Falling
- Does Devaluation Cause Inflation?