The solution to exchange rates

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  In addition to these factors the domestic interest rate, foreign interest rates, and expected future exchange rate also affect the short-term foreign exchange rates.

• Independent monetary and fiscal policies

  Coordination of economic policies will make exchange rates more stable, since the relative attractiveness of the various currencies is less likely to change significantly. This posting provides the solution to the student's question.

• definitions of exchange rate and some references

  Floating exchange rates allow the market to determine the relative value of currencies.

• Export competitiveness by devaluing currency

  Thus, in the long run, sterilized intervention will not effect exchange rates and export competitiveness. The solution discusses different aspects and impacts on the Asian foreign exchange market.

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  How would the effectiveness of an expansionary monetary policy change if exchange rates were fixed? Solution: Expansionary monetary policy involves increasing money supply and lowering interest rates.

• Main Challenges to Global Financial Management

  According to Keown (2002), exchange rates of countries with high inflation rates tend to decline.

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  The solution discusses about exchange rate considerations.

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  Many economists think that in most circumstances, floating exchange rates are preferable to fixed exchange rates because floating rates are responsive to the foreign exchange market.

• Exchange rates

  Please see the attachment The solution explains various questions relating to exchange rates