crazyme
New Member
...ummm....
-
Looking for HSC notes and resources? Check out our Notes & Resources page
hmm....whats exchnge rate?... (1 Viewer)
- Thread starter crazyme
- Start date
timmii
sporadic attendee
- Joined
- Nov 9, 2002
- Messages
- 928
Do you not know, or do you want an exam response to that question?
Either way: The exchange rate is the expression of one unit of currency in terms of another. A floating exchange rate is one in which the rate is determined by factors of supply and demand with minimal government inteference. Any interference is considered to "dirty" the float and is usually done so as to maintain an alignment of the domestic currency with those of trading partners and to minimise wild fluctuations which could impact on trade and investment patterns.
For the record:
Australia has a floating exchange rate (and is thus subject to the market i.e sometimes its US59c, sometimes US58c etc...) As a result of the floating exchange rate, our balance of payments sum to equal zero, as demand must equal supply and thus outflows = inflows, and the exchange rate adjusts accordingly. (you need a better explanation for that in a BoP essay though, and probs an exchange rate one as well...this is just basics)
Either way: The exchange rate is the expression of one unit of currency in terms of another. A floating exchange rate is one in which the rate is determined by factors of supply and demand with minimal government inteference. Any interference is considered to "dirty" the float and is usually done so as to maintain an alignment of the domestic currency with those of trading partners and to minimise wild fluctuations which could impact on trade and investment patterns.
For the record:
Australia has a floating exchange rate (and is thus subject to the market i.e sometimes its US59c, sometimes US58c etc...) As a result of the floating exchange rate, our balance of payments sum to equal zero, as demand must equal supply and thus outflows = inflows, and the exchange rate adjusts accordingly. (you need a better explanation for that in a BoP essay though, and probs an exchange rate one as well...this is just basics)