Questions tagged [currency-exchange]

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Mistake in Wikipedia article on Fixed exchange rate system?

I think there is a mistake in the following Wikipedia-article: https://en.wikipedia.org/wiki/Fixed_exchange_rate_system at figure 2 and 3. I think the ECB has to BUY (not sell) the dollars as in point ...
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Why did the Iranian Rial peak suddenly on 1 August 2014?

Search Iranian Rial and click on Max above the chart. Iranian Rial to Pound Sterling: Why did the Iranian Rial peak suddenly on 1 August 2014?
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5 votes
1 answer
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Does Russian Ruble strengthening mean the sanctions did not hurt Russian economy?

After imposing the sanctions to Russia, 1 USD skyrocketed to 139 Rubles, but now it is back to the pre-war exchange rate. Moreover, it kept decreasing almost every day recently. Does this mean that ...
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Countries whose currencies have changed

Countries whose currencies have changed Can you highlight the main reasons as why some countries have changed their currencies ? What will be the impact on their economy once they change their ...
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5 votes
1 answer
104 views

Banking system in countries without their own currency

I am interested in the working of the banking system in countries that don't have their own currency, e.g., Ecuador or Panamá. Can you point me to studies or articles about it? For example, do banks ...
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Is the value of crypo currencies determined against the US dollar?

For example, for a european investor is EUR/Bitcoin implied directly from of USD/Bitcoin or are traded as 2 different markets?
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-3 votes
2 answers
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Do exchange rate indicate richness/poorness of a country

Suppose there are two countries, A and B and if 1 unit of currency of A = x units of currency of B And x>1 does that mean that country A is richer or people are well off there?
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1 vote
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How does exchange rate affect the degree of local firms competitiveness?

It's written in my textbook that: Inflation causes exports to become less internationally competitive as their prices increase. So, demand for exports decreases. It's written in another lesson in my ...
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2 answers
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Create currency with truly fixed exchange rate

Currency fluctuates depending on supply and demand In fixed exchange rate, any central banks could ties their currency to another country's currency or Gold price. Which, basically, still fluctuates ...
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2 answers
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Does the exchange rate between 2 currencies NOT account for the cost of living (COL) in their respective countries? [closed]

Alice and Bob both live in a country that has a very low cost of living (like India). They are entry-level software engineers straight out of college. Alice works remotely for a US company that pays, ...
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0 votes
2 answers
76 views

Can an appreciating currency lead to inflation?

If a currency, e.g. the rupee (INR), is appreciating against, say, the USD, it possibly means that there is a high demand for the former. India could have net exports, high remittances, increasing ...
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1 vote
2 answers
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Is it theoretically possible for a singular national currency to exist under a free banking system?

Free Banking is a proposed monetary system, usually by Austrian Economists, as an alternative to the prevalent Central Banking system. Under this arrangement, commercial banks would issue their own ...
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Why does Bimetallism require international cooperation to have a chance at succeeding?

I was reading the Britannica encylopedia's article about Bimetallism and under the arguments put forth against it, they cite that bimetallism doesn't work without international cooperation. Could ...
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4 votes
4 answers
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Who is losing in an arbitrage?

When some entity takes advantage of an arbitrage opportunity, who is losing money? For example, when there are price differences across cryptocurrency exchanges and someone exploits an arbitrage ...
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3 votes
1 answer
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What happened to the Zimbabwe cash dollar after the introduction of Dollarization?

Let's say, before dollarization, I owned 1 million Zimbabwean dollars in cash and the next day dollarization went into effect. So in dollarization, the current Zimbabwean dollars will be invalid and ...
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0 votes
1 answer
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Search terms to find a menu of currency exchange mechanisms?

I'm look to find a good source for comparing mechanism designs for simple currency exchanges. Is there a name for a category of game (e.g. Stackelberg game) that encapsulates the operation of an ...
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What does 'currency convertibility' mean?

As a student with almost zero background in economics, I've been struggling to comprehend the notion of the currency convertibility. Most of the definitons I've found online talk about the ease with ...
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Relation between foreign currency reserve and exchange rate and others

What is the relationship between foreign currency reserve(USD) of a country with it's exchange rate (against USD), and also with export and import strength ? And if it's too complicated to explain, ...
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6 votes
2 answers
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Why is the Australian dollar, often viewed by traders as a proxy for the Chinese economy?

The Australian dollar, often viewed by traders as a proxy for the Chinese economy, gained 0.3 per cent against its US counterpart. From: S&P 500 hits one-month high on renewed trade hopes (...
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1 answer
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Local vs. foreign currency denomination for Emerging Market Bonds

For emerging market governments, why is it safer to issue bonds in local currencies than in foreign currencies to raise money? Given that both are invested in by foreign investors, couldn't both ...
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Effect of interest rates on currencies

I always understood that high interest rates in country A attract investors and cause the currency to appreciate. However, the interest rate parity theory suggests that high interest rates weaken a ...
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0 votes
1 answer
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Purchasing power of currency abroad

Say you have two countries A and B. Suppose we have a situation where country A's currency can purchase much more in country B than the other way round. What causes this phenomenen? Is it possible ...
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-1 votes
2 answers
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Are currencies equilibrating?

I was travelling recently and realised that dollars, euros, British pounds and Swiss francs all have more or less the same worth (i.e. 1 dollar $\cong $1 pound $\cong$ 1 euro $\cong $ 1 chf). This was ...
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1 vote
1 answer
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Currencies fixed to gold

Based on the quoted section & example below: Why would the Franc or USD fall in price vs the other if they are both fixed to gold; why would having less gold cause paper money to contract? Why ...
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1 vote
1 answer
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Can increase of NEER cause higher inflation?

I´m trying to find siutable econometrics model for explaining inflation during financial crisis and after. My final model shows that if NEERnominal effective exchange rate) increases, the inflation ...
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2 votes
1 answer
80 views

Why would a common currency such as the Euro that can't be devalued be incentive for banks to lend money to a country?

I'm reading an article that is claiming that when the Euro was created, banks began lending more money to countries than before because as the Euro is a common currency across many countries one ...
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10 votes
3 answers
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How is it possible that all currency exchange rates are fixed w.r.t. to each other?

I wondered if it would be beneficial to exchange a currency through one or more "in-between" currencies. For example: instead of trading Russian Ruble (RUB) to Euro's (EUR), one would trade from RUB ...
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1 vote
0 answers
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Why Yen grew stronger after North Korea's H-bomb threat? [duplicate]

Financial markets have had only a muted reaction to the dispute in recent months, but on Friday assets regarded as havens for investors jumped immediately after the news of North Korea’s latest H-...
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What are some benefits of local currencies?

Lets say that we have in my country Greece there is an Island Crete that it has big production (agriculture,small banks etc.) and produces big surplus compared with other parts of Greece and the ...
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0 votes
1 answer
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exchange rate and domestic money supply part II

This question is related to the answer to the question exchange rate and domestic money supply It is said that the 'CB purchases foreign currency on currency market'. Is it possible that some of ...
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1 vote
1 answer
914 views

Exchange rate and domestic money supply

It seems an obvious fact (not explained by authors but stated) that when a Central Bank purchases foreign currency (to stabilise its own), the domestic money supply goes up. It seems to me that the ...
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-1 votes
1 answer
576 views

Balance of Trade - Currency devaluation in a price taker economy

How will a real exchange rate devaluation affect Balance of Trade, if an economy is a price taker in world markets for both export and import?
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2 votes
1 answer
268 views

what in real terms causes one nations currency to be more valuable than another?

I would like to understand in atomic terms what makes the value of one nation's currency change with regard to another. Read that, without citing complex terminology but in basic terms. Obviously, ...
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1 vote
2 answers
4k views

Is there a difference between buying a currency and selling the currency to be converted to?

I'm not an economist. I'm looking to exchange my CAD to EUR. I watched the rates on a exchange office, and I found something strange: ...
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1 vote
0 answers
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What's the equation of currency fluctuation?

Preamble: Today the rate of EUR is 82.09 in BDT ( Bangladeshi Currency) and two hours later it's 82.50 ( I hope, it's increasing). But why does this fluctuation just keeps happening? Looks like the ...
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-3 votes
1 answer
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How do currency traders resolve imbalances in the demand for different currencies?

Countries trade different amounts of goods that are inherently imbalanced. How do currency traders resolve these imbalances in the demand for different currencies? For example.... Imagine we have two ...
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4 votes
1 answer
349 views

How does Egypt prevent people from arbitraging their currency?

Apparently Egypt uses a fixed exchange rate so there is a substantial difference between the government rate for the Egyptian pound and the price on the street. What prevents someone from just buying ...
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