Economics Stack Exchange
Economics Stack Exchange

Questions tagged [exchange-rates]

the price at which one currency may be exchanged for another.

208 questions
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Interest rate parity: Counter intuitive

What is the basis for interest rate parity to hold? I know, the reason stated is excess returns Excess returns as such should not be the reason for a currency depreciation. for e.g. when we posit that forward rate converge to the spot rates over…
figs_and_nuts
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What is the reason of devaluation in Turkish Lira?

I guess there is a some fundamental issues in the economy but I wonder the apparent reason of the recent devaluation in Turkish Lira? Does Turkey need to pay debt in very short term? How much is it? What is the reason of the debt?
Kutadgubilig
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Doubt in understanding the advantages of Fixed Exchange Rate

The author of my book writes: ADVANTAGES OF EXCHANGE RATE If exchange rates are fixed, then inflation may have a very harmful effect on the demand for exports and imports. Because of this, the government is forced to take measures to ensure that…
Student
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What will happen if Chinese yuan turn floating exchange rate system?

The excange of Chinese yuan is controled by Chinese government in part now. What will happen if Chinese yuan turn floating exchange rate system?
Yuuichi Tam
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Why is the New Zealand dollar on parity with the Australian dollar?

The New Zealand dollar has reached parity with the Australian dollar for the first time in more than forty years. The question is - what are the economic factors that have caused this?
dwjohnston
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The effect of inflation differentials on the relative prices of goods across countries

I am struggling to understand the answer to this question (the answer was given as C): If inflation in South Africa is lower than that in the United States (US), US exports are becoming relatively _____ in South African markets. This shifts the…
ahorn
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Real Exchange Rate Cross Rate

I have to do a study to determine the real exchange rate . I've read about the purchasing power parity and the interest rate parity . I also found the cross rate formula and was wondering if the result I get after applying this formula is a real…
Michael
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Dornbusch Sticky Price (Overshooting) model

Stupid question: What do the phi and lambda from the equations above represent?
Ana
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In this 3-way currency exchange, who loses, and by how much?

Let's say, hypothetically, we have the following imbalanced exchange rates: 1USD = 1.2EUR 1.2EUR = 1000 JPY 1000 JPY = 1.5 USD Let's say person A starts off with 1 USD, buys 1.2 EUR from B, then buys 1000 JPY from C with the 1.2 EUR, then finally…
C_Z_
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Does it mean that the value of currency decreases?

Higher interest rates offer lenders in an economy a higher return relative to other countries. Therefore, higher interest rates attract foreign capital and cause the exchange rate to rise. Does to rise means the value of currency decreasing?
user1481
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Is there an accepted metric for "the value of the dollar"?

Is there a reasonably well-established scheme for estimating the value of the dollar in international trade, somehow relating it to the "average" of other currencies or to some currency-independent metric? Something that could be used when…
Hot Licks
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Who loses/wins in exchange rate fluctuations?

I recently joined Amazon prime unknowingly and USD99 was debited on my non-USA credit card for an annual membership. I canceled the membership and was refunded USD99 after two days. Due to exchange rate fluctuations, I lost approximately USD10.…
aslan
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If I make an international purchase with a card which contains domestic currency, is this currency converted to the currency of the seller?

Let's say that I buy an app from the Play store. The seller quotes in Dollars, and I pay in Rupees (INR) --how does this transaction happen? Is my ₹ converted into $? Does this transaction also influence the forex markets (of course, negligibly…
WorldGov
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What happen to Euro if Greece defaults

I have some money in Euros but living in USA. Today they are going to decide if the Greece will stay in Euro-zone. I was wondering what will happen to Euro if Greece leave the EU. Or what is expected to happen? I'm planning to exchange the Euros in…
Grasper
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Purchasing power parity and triangular arbitrage

Does no arbitrage in the FX market have any implications for purchasing power parity (PPP) tests? To be more specific, suppose you have currencies A, B and C and you can form three currency pairs (exchange rates) AB, BC and AC. Only two of those can…
Pavel Filip
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