Buy custom Factors that Determine the Currency Exchange Rates
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Topic: |
Business
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Number of pages / Number of words: |
16 / 4434 |
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This results demand curve shifts right from D
to D' and keep the value of the exchange rate within the band.
Price of currency in Euros
[IMAGE] D'
S
D S'
Upper margin
Lower margin
D'
S D
S'
Figure 1.2
A fixed exchange rate is a kind of currency whose value has fixed
against another or other currencies...
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And the currency is not allowed
to appreciate or depreciate against each other. It is guaranteed and
totally controlled by the government. In order to keep a currency at a
fixed value, the central bank must prepare to buy and sell the
currency at the fixed price. In that case, central bank has to find
the foreign currency supply...
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General points of the essay
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