Archive for the ‘business’ tag
The Exchange Rates
Fixed Versus Floating Exchange Rate
An exchange rate is the price at which one country’s currency trades for another on the foreign exchange market There are 2 extreme regimes of exchange rates – floating exchange rate and fixed foreign exchange rate.
Floating Exchange Rate
The floating exchange rate is a market-driven price for currency, whereby the exchange rate is determined entirely by the free market forces of demand and supply of currencies with no government intervention whatsoever.
Broadly, the floating exchange rate regime consists of the independent floating system and the managed floating system. The former is where exchange rate is strictly determined by the free movement of demand and supply. For managed floating system, exchange rate is also determined by free movement of demand and supply but the monetary authorities intervene at certain times to “manage” the exchange rate to prevent high volatilities.
Pros & Cons of Floating Exchange Rate
The floating exchange rate boasts various merits. Firstly, there is automatic correction in the floating exchange rate as the country simply lets it move freely to the equilibrium of demand and supply. Secondly, there is insulation from external economic events as the country’s currency is not tied to a possibly high world inflation rate as is under a fixed exchange rate. The free movement of demand and supply helps to insulate the domestic economy from world economic fluctuations. Thirdly, governments are free to choose their domestic policy as a floating exchange rate would allow for automatic correction of any balance of payment disequilibrium that might arise from the implementation of domestic policy.
Nonetheless, there are also specific concerns about the exchange rate being unstable and uncertain under the floating exchange rate regime. Also, speculation tends to be higher in the floating exchange rate regime, hence leading to more uncertainty especially for traders and investors.
Fixed Exchange Rate
For a fixed exchange rate, the government is unwilling to let the country’s currency float freely, and they state a level at which the exchange rate will stay. The government takes whatever measures that are necessary to maintain the rate and prevent it from fluctuating. There are two methods which exchange rate could be applied to the price of currencies, a fixed exchange rate and a pegged exchange rate.
Under the fixed exchange rate system, a decrease in the exchange rate which is infrequent are called revaluations. While an increase in the exchange rate are called devaluations. A devaluation in a fixed exchange rate will cause the current account balance to rise, making a country’s export less expensive for foreigners and also discourage import by making import products more expensive for domestic consumers,. This will leads to an increase in trade surplus or a decrease in trade deficit. The opposite happens in a revaluation
Pros & Cons of Fixed Exchange Rate
Despite its rigidity, the fixed exchange rate regime is still used for several reasons. First, there is certainty in fixed exchange rate. With it, international trade and investment becomes less risky. Second, there is little or no speculation on a fixed exchange rate.
However, a fixed exchange rate contradicts the objective of having free markets and it is not able to adjust to shocks swiftly like the floating exchange rate.
About the Author
Shu Wei Wong works as a planner/strategist. She writes just about anything that interest her or writes on issues highly related to her field of work, especially on strategy and leadership. Find more of her thoughts at http://360strategyleadership.blogspot.com/
jim Rogers 18 Mar 2010
|
|
Barcoded price label Photo Mugs Barcoded price label. The price is given inboth British Pounds (GBP) and Euros (EUR). Abarcode is a series of printed lines of varyingthickness. Each line corresponds to a number, seenprinted below the barcode. The barcode number canbe read using a barcode scanner, or manually typedout. The number is used to identify a product.This information can then be used to find out theprice of a product….. |
|
|
Mozart in Salzburg $29.98 The pieces selected for this 1990 concert form an admirably programmed cross-section of Mozart’s accomplishment, from his youth to his final years, from stirring orchestral works to a pair of emotive arias. Would that the performances displayed this same range and variety. When rousing excitement is called for, Hans Graf’s muscular readings deliver the goods, but unfortunately he never displa… |
|
|
Exchange Rate Tracks: 1. News Flash 2. One City (feat. Our Reality) 3. Dance for Cash (feat. Courtney) 4. Diamonds and Gold 5. Can’t Miss You Anymore 6. Italian Mistress 7. Little Italy 8. Dear Mr. President (feat. Ernie Icehouse & Emmett Van Slyke) 9. Into the Night (feat. Benny Mardones) 10. Never Leave Me Alone (feat. Oxburg) 11. End of the Road (feat. Anonimo) 12. Dance for Cash (feat. Courtney) Bonus Track… |
|
|
Exchange Rate EP $2.97 … |
|
|
Inside the Global Economy Box Set This series presents the principles of international economics, using on-location documentary case studies, news and archival footage, and commentary from distinguished international economists. “Inside the Global Economy”, an international coproduction, offers a balanced view of how the world’s economic picture has developed and what the future might hold. A 13-part program…. |
|
|
Extech 407355 Noise Dosimeter/Datalogger with PC Interface $649.00 Personal accumulated noise exposure measurement. Workplace noise assessment. OSHA and other regulatory agency compliances…. |
|
|
Currency Market – 18W x 14H – Peel and Stick Wall Decal by Wallmonkeys $30.99 WallMonkeys wall graphics are printed on the highest quality re-positionable, self-adhesive fabric paper. Each order is printed in-house and on-demand. WallMonkeys uses premium materials & state-of-the-art production technologies. Our white fabric material is superior to vinyl decals. You can literally see and feel the difference. Our wall graphics apply in minutes and won’t damage your paint or l… |
|
|
Zwei Senioren Beim Spinning – 72W x 48H – Peel and Stick Wall Decal by Wallmonkeys $107.99 WallMonkeys wall graphics are printed on the highest quality re-positionable, self-adhesive fabric paper. Each order is printed in-house and on-demand. WallMonkeys uses premium materials & state-of-the-art production technologies. Our white fabric material is superior to vinyl decals. You can literally see and feel the difference. Our wall graphics apply in minutes and won’t damage your paint or l… |
|
|
24: Season Six $17.98 Twenty months after being captured by the Chinese and brutally tortured, Jack Bauer returns to the United States at the outset of Day 6 only to find himself asked once again to make the ultimate sacrifice for his country. A terrorist group responsible for carrying out a series of deadly attacks on American soil has demanded Bauer be delivered to them, but Jack quickly discovers their agenda is far… |
|
|
Metropolis (Restored Authorized Edition) $6.95 It is the future & humans are divided into two groups: the thinkers who make plans (but dont know how anything works) & the workers who achieve goals (but dont have the vision). One man from the thinkers dares visit the underground where the workers toil & is astonished by what he sees.. Studio: Kino International Release Date: 11/09/2004 Run time: 124 minutes… |