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Topic: Floating exchange rate

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	Exchange Rates.
		In finance, the exchange rate between two currencies specifies how much one currency is worth in terms of the other.
		An exchange rate quotation is given by stating the number of units of a price currency that can be bought in terms of 1 unit currency.
		Exchange rates for such currencies are likely to change almost constantly as quoted on financial markets, mainly by banks, around the world.
	www.x-rates.info (969 words)

	Exchange rate: a key concept in Economics (Site not responding. Last check: 2007-10-16)
		Thus, the exchange rate is a conversion factor, a multiplier or a ratio, depending on the direction of conversion.
		For instance, if a country A has an inflation rate of 10%, country B an inflation of 5%, and no changes in the nominal exchange rate took place, then country A has now a currency whose real value is 10%-5%=5% higher than before [1].
		To the extent that the exchange rate is determined by the trade balance, the exchange rate is counter-cyclical as the latter.
	www.economicswebinstitute.org /glossary/exchrate.htm (2439 words)

	Nicholas' Homepage
		Other variants on floating exchange rates include frequent devaluations or revaluations and a crawling peg, where the currency is allowed to depreciate periodically by a well-accepted amount or tied to an index (usually an inflation index).
		With floating exchange rates on the other hand, there would be no risks of exchange rate crises (for example speculation or other pressures, forcing the central bank to costly interventions to defend the exchange rate).
		If changes in exchange rate expectations are the major cause for disturbances, flexible rates tend to be the superior regime but this is only in case where no wage indexation exists, otherwise the effects on the economy are the same regardless of exchange rate regime.
	homepage.mac.com /nicholashjelmberg/hemsida/skrifter423_en.html (2614 words)

	Chapter 24
		Cleanly floating exchange rates are excessively variable, perhaps because private supply and demand are sometimes driven not by rational examination of information on the economic fundamentals, but rather by bandwagons and similar speculative behavior, or simply because exchange rates tend to overshoot their long-run values.
		Thus, a managed float permits a country to obtain many of the benefits of a floating exchange rate, including some policy independence and the ability to use exchange rate changes in the process of adjustment to external imbalances, while using intervention to limit wide swings and excessive variability in exchange rate values.
		Furthermore, they believe that excessive rate movements that persist beyond the short run, such as the overshooting that can keep exchange rates away from their longer run values for a number of years, create signals for resource reallocations that are too large or too rapid.
	www.wright.edu /~tdung/chapter24_Pugel.htm (3631 words)

	Foreign Exchange
		United States Dollar exchange rate is 1.2 dollars per euro, the price currency is the dollar and the unit currency is the euro.
		The nominal exchange rate is the rate at which an organisation can trade the currency of one country for the currency of another.
		Rate fluctuations are usually to do with world economy or the national economies so significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.
	www.foreign-exchange.ru (1502 words)

	Finance: Chapter 110-1: Exchange Rate Volatility and Risk
		Floating rates, do just that, they float … up and down, down and up, from year to year, week to week, and minute by minute.
		Since the future exchange rate is predetermined on such a contract, the rate of return is guaranteed as well.
		A 2004 IMF study (Exchange Rate Volatility and Trade Flows - Some New Evidence, by Peter Clark, Natalia Tamirisa, and Shang-Jin Wei, May 2004) notes that on average, during the 1970s, 80s and 90s the volatility of fixed exchange rates was approximately the same as that of floating rates.
	internationalecon.com /v1.0/Finance/ch110/F110-1.html (1415 words)

	Howstuffworks "How Exchange Rates Work"
		In this article, we'll tell you what exchange rates are and explain some of the factors that can affect the value of currency in countries around the world.
		An exchange rate is simply the cost of one form of currency in another form of currency.
		Floating exchange rates are considered more efficient, because the market will automatically correct the rate to reflect inflation and other economic forces.
	money.howstuffworks.com /exchange-rate.htm/printable (1515 words)

	A fixed or float exchange rate strategy? - JAMAICAOBSERVER.COM
		An exchange rate is said to be floating when a government allows market forces or demand and supply factors to determine the price of its currency in relation to another currency.
		In sum, fixing the exchange rate is tantamount to having your domestic monetary policy determined by the country to which the domestic currency is pegged.
		It is true that a fix exchange rate promotes international trade through exchange rate predictability; however, a fix exchange rate does not insulate an economy from the vagaries of the international capital market.
	www.jamaicaobserver.com /magazines/Business/html/20060412T210000-0500_102487_OBS_A_FIXED_OR_FLOAT_EXCHANGE_RATE_STRATEGY_.asp (1420 words)

	Chapter 23 FLOATING EXCHANGE RATE AND INTERNAL BALANCE
		With floating exchange rates the effect of a change in fiscal policy depends on how responsive international capital flows are to changes in interest rates.
		The exchange rate on the lira is fixed with unsterilized intervention.
		The exchange rate on the lira is fixed with sterilized intervention.
	www.wright.edu /~tdung/Chapter23_Pugel.htm (2486 words)

	International Economics - Historial Exchange Rate Regime of Asian Countries
		The exchange rate in Bank Indonesia's daily squaring session in the afternoon was allowed to deviate from the indicative rate posted in the morning by Rp2 a day (previously, the deviation was allowed up to Rp1 a day).
		A foreign exchange subsidy for food was introduced, which led to the reclassification of the exchange rate system from unitary to dual.
		The exchange rate in the 3rd column is the Official Rate which set by the Central Bank of Indonesia (Bank Indonesia).
	intl.econ.cuhk.edu.hk /exchange_rate_regime/index.php?cid=6 (1397 words)

	[No title]
		Once again, the theory that floating exchange rate systems are more efficient might seem intuitive, but the model hasn't performed to people's expectations, and the floating system has some nasty side effects.
		As discussed earlier, a floating regime implies that the value of the dollar will be based on economic fundamentals, but that has not been the experience.
		Exchange rates used to convert the Pesos back to your local currency when making a purchase on the card are usually the same as if you were drawing cash from a cash machine using your card.
	www.lycos.com /info/currency-exchange-rate--miscellaneous.html (433 words)

	China currency: Trade, Revaluation, Exchange Rate
		During the era of the command economy, the value of the RMB was set to unrealistic values in exchange with western currency and severe currency exchange rules were put in place.
		Through the use of swap centers, the exchange rate was brought to realistic levels and the dual track currency system was abolished.
		Many economists believe that only fixed exchange rates or floating exchange rates are stable over the long term, because a one-time change in exchange rates might cause speculators in the future to take positions on possible exchange rate fluctuations which would lead to pressure to completely float the currency.
	www.danwei.org /china_information/china_currency_trade_revaluati.php (1159 words)

	Exchange Rate Primer
		An exchange rate is the rate of exchange between two currencies.
		Floating exchange rate: the exchange rate is determined by the foreign exchange market.
		Note that the real exchange rate X is an index number, i.e., it does not have a physical dimension.
	pacific.commerce.ubc.ca /keith/Lectures/exr.html (1623 words)

	Fridays Academy: Exchange Rate Policy \| Poverty and Growth Blog (Site not responding. Last check: 2007-10-16)
		Countries with flexible exchange rates allow their currency to increase or decrease in value against other currencies, depending on its demand and supply relative to the demand and supply of other foreign currencies.
		Fixed exchange rates can also perform a useful role in anchoring inflation expectations in country that is determined to break with high inflation.
		Maintaining fixed exchange rates can cause a gradual erosion of competitiveness if domestic inflation is higher than that of trading partners (oftentimes the case for developing countries).
	pgpblog.worldbank.org /fridays_academy_exchange_rate_policy (1152 words)

	Feature - Economic Implications of Floating Exchange Rates
		In a floating rate system, the exchange rate is determined directly by market forces, and is liable to fluctuate continually, as dictated by changing market conditions.
		The distinguishing characteristic of a floating exchange rate system is that the price of a currency adjusts automatically to whatever level is required to equate the supply of and demand for that currency, thereby clearing the market.
		These characteristics of the floating exchange rate mechanism have important implications both for the nature of our relationship with the global environment, and for the policy options available to the authorities in managing the economy.
	www.abc.net.au /money/currency/features/feat10.htm (1222 words)

	Venezuela's Floating Exchange Rate Could Mean Trouble for Banks
		While the sharp increase in interest rates should benefit intermediation margins, with banks able to get spreads as wide as 40 percentage points, the negative effect on asset quality will be more significant given the weak loan portfolios.
		The effect of a floating bolivar on capital will also be negative, and capital ratios will be pressured downward due to the appreciation of dollar-denominated assets and liabilities.
		Ratings are statements of opinion, not statements of fact or recommendations to buy, hold, or sell any securities.
	www.standardandpoors.com /europe/francais/Fr_news/Venezuela-Flloating-Exchange_15-02-02.html (516 words)

	International Economics - Historial Exchange Rate Regime of Asian Countries
		In March 1978, the exchange rate regime was changed from one that was pegged to the U.S. Dollar to a system of pegging to a weighted basket currency of Thailand's major trading partners.
		The exchange rate of the Baht was determined on the basis of supply and demand in the foreign exchange market and was allowed to float freely (Independently floating).
		From the year 1992 onwards, the rates are only extracted from IMF annual report because the most updated rate recorded in World Currency Yearbook 1990/93 was the rate in 1991.
	intl.econ.cuhk.edu.hk /exchange_rate_regime/index.php?cid=2 (1101 words)

	Fixed versus floating exchange rate - Czech National Bank
		A fixed exchange rate denotes a nominal exchange rate that is set firmly by the monetary authority with respect to a foreign currency or a basket of foreign currencies.
		Both types of exchange rate regime have their pros and cons, and the choice of the right regime may differ for different countries depending on their particular conditions.
		The exchange rate in the Czech Republic was pegged to a basket of currencies until early 1996, then the peg was effectively eliminated through a substantial widening of the fluctuation band, and now the Czech economy operates in the so-called managed floating regime, i.e.
	www.cnb.cz /www.cnb.cz/en/monetary_policy/basic_terms/fix_float_exchange_rate.html (399 words)

	[No title]
		Proponents of a floating exchange rate regime cite as its advantages the autonomy it gives to monetary policy, the symmetry of adjustment under floating, and the automatic stabilization which floating rates provide when aggregate-demand shocks occur.
		Critics fault floating rates on the grounds that they do not impose enough discipline on governments or promote economic policy coordination, because of alleged detrimental effects on international trade and investment, and because floating exchange rates may be susceptible to harmful destabilizing speculation.
		This advantage of floating exchange rates proved to be a disadvantage as the recovery of 1974-1975 turned into the slowdown of 1976.
	www2.hawaii.edu /~gangnes/imch19.doc (2829 words)

	»»Floating-exchange-rate Reviews««
		Exchange rate unions : a comparison with currency basket and floating rate regimes
		Floating exchange rates : the lessons of recent experience
		Floating Exchange Rates and International Monetary Reform (Studies in Economic Policy) (Aei Studies : 172)
	www.financial-book-review.com /Flexible-budget/Floating-exchange-rate (161 words)

	Floating (Site not responding. Last check: 2007-10-16)
		A "floating exchange rate" is not determined by a set rate; it rises and falls based solely upon supply and demand (i.e.
		If a country is selling a lot of their products, then their rate will be very good; however, if they are having to buy a lot, it won't be.
		In this scenario, a country would not be trying to manipulate their imports and exports by their currency exchange rate as they would be if they were using a pegged rate.
	library.thinkquest.org /19552/floating.htm (159 words)

	Effects of a Floating Exchange System [ Biz/ed Virtual Developing Country ]
		One argument is that a floating exchange rate will reduce the level of inflation.
		The introduction of a floating exchange rate and the abolition of exchange controls lead to substantial capital flight as wealthy Zambians and Zambian firms attempted to move their finances abroad and convert their savings of Kwacha into hard currencies held in overseas banks.
		A wildly fluctuating exchange rate at the mercy of national and international currency speculators introduces considerable uncertainty to export and import prices and consequently to economic development.
	www.bized.co.uk /virtual/dc/trade/theory/th11.htm (640 words)

	EXCHANGE RATE
		The freely floating exchange rates are determined by the forces of demand and supply.
		In addition, flexible exchange rates allow policy makers to be flexible in conducting domestic monetary and fiscal policies.
		The current system is a managed floating exchange rate system in which governments attempt to prevent rates from changing too rapidly in the short term.
	staffwww.fullcoll.edu /fchan/macro/5exchange_rate.htm (403 words)

	[No title]
		An advantage of the floating exchange rate is that although domestic inflation has an effect on the exchange rate, it would have no effect on international ‘cost competitiveness’ because of that depreciation.
		An advantage of a fixed exchange rate is the governments would be unable to expand their monetary supply (amount of money) farther than could be maintained causing inflation.
		Fixed exchange rates are more accurate at prediction the actual value of a currency even though it cannot accurately tell you what it will be in the future.
	www.rit.edu /~swe8367/HW/GB/GB_ch10.doc (529 words)

	: What is FOREX trading
		Foreign Exchange Market (Forex) is the arena where a nation's currency is exchanged for that of another at a mutually agreed rate.
		It was created in the 70's when international trade transitioned from fixed to floating exchange rates, and nowadays is considered to be the largest financial market in the world because of its tremendous turnover.
		The rate at which currencies are exchanged one for another is called the currency exchange rate.
	www.alpari-idc.com /en/about/forex.html (1869 words)

	TODAY'S ZAMAN
		Turkey’s floating exchange rate is more effective than the fixed exchange rate, claims World Bank Turkey Director Andrew Vorkink, suggesting that it is a system that should be continued.
		The floating exchange rate has created a favorable condition for competition Vorkink defended, and it paved a convenient way for Turkey to compete in global markets with China and the European Union in particular.
		It is true that a floating exchange rate resulted in extreme value and something can be done about it; however, this can cause Turkey to once again face the problems experienced in the past.
	www.todayszaman.com /tz-web/detaylar.do?load=detay&link=30250 (458 words)

	exchange rates (Site not responding. Last check: 2007-10-16)
		The main problem with floating exchange rates is that any change in demand by foreigners for our goods or securities is likely to move the exchange rate, which will then affect every other kind of demand, especially for goods.
		If the exchange rate were higher, say four pesos to the dollar, a much greater quantity of dollars would be supplied than demanded.
		In the two examples above, what caused the exchange rate to move was the existence of either an excess demand for dollars or an excess supply of dollars at the old exchange rate.
	faculty.uwb.edu /danby/bls324/macro/exchange.html (1428 words)

	PBOC on Reforming RMB Exchange Rate Regime
		Pressing ahead with reform of the RMB exchange rate formation mechanism is the necessity for alleviating unbalanced foreign trade, expanding domestic demands as well as upgrading enterprises' international competitiveness, and raising the level of opening to the outside world.
		Answer: The general objective of RMB exchange rate reform is to establish a sound managed floating exchange rate system based on market supply and demand and to maintain a basic stability of the RMB exchange rate on a rational and balanced level.
		RMB exchange rate reform is required to stick to the principle of initiative, controllability and gradualness.
	english.cri.cn /855/2005/08/06/275@6836.htm (708 words)

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