Questions tagged [currency-exchange]

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How does dollarization work, with respect to buying dollars using the soon-to-be obsolete currency?

I'm reading about the plans of the new Argentinian government and wondering how their plans for dollarization are possible. Let's imagine that the Argentinian government has 100 pesos that are worth ...
Slava Knyazev's user avatar
0 votes
1 answer
41 views

Does buying dollars preserve a country's currency's exchange rate?

On pg. 10 of Emmanuel's Profit and Crises, he says "ever since the dollar standard was set up, no country could cease buying all the dollars offered to it without effectively revaluing its ...
shea's user avatar
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Did both the U.S. and Zimbabwe economically benefit from dollarization?

Mugabe's leadership of Zimbabwe was harshly criticized by the U.S., citing human right abuses and economic mismanagement. Consequently, the U.S. congress passed the Zimbabwe Democracy and Economic ...
ATL_DEV's user avatar
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difference between "crawling like arrangement" and "stabilized arrangement"

What is the difference between "crawling like arrangement" and "stabilized arrangement" ? what about margins ? both less than + or -1% ?
Leila Zniber's user avatar
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Do borrowing costs go down as a currency depreciates?

I was watching a video (https://youtu.be/2CVOfzuqoY4) and got very confused by the following sentence at 1:18: "Usually when an established currency depreciates in value, borrowing costs in that ...
ayazasker's user avatar
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1 answer
30 views

GBP Currency Crisis - Forex supply and demand affecting exchange rates

Reading this article on Why China Buys US Treasury Bonds I understand the notion of supply and demand affecting a currency value against the other and how they need to buy up the excess dollars they ...
morleyc's user avatar
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1 answer
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How to determine exchange rate for a new currency

I have always read in present time currency exchange rate works on demand and supply But imagine tomorrow a brand new nation with brand new currency is born All its people are farmers and land is not ...
anuraag shukla's user avatar
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0 answers
66 views

Options, Futures and other derivatives, book by Hull, confusion of currencies

I have a small technical problem with a book by Hull: on the page 7, the first line, in the 11th edition of his book Options, Futures and Other Derivatives (please see the snippet below) he writes &...
user2925716's user avatar
3 votes
2 answers
91 views

Will the value of ruble decrease in the long term if the sanctions against Russia are not lifted?

For simplicity, let's take the example of the USD-to-RUB rate. Currently, Russia manages to maintain it at around 60 RUB per USD. However, as far as I understand it, they manage to do it by selling ...
Archil Zhvania's user avatar
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1 answer
166 views

Where does the euro/dollar rate data prior to 2002 come from?

The Euro was created in 1999 and introduced in 2002. But if you search for the euro/dollar rate data there is a rate value back to Aug 1983. Where does this data come from?
gacero's user avatar
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2 answers
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What is meant by "expansionary fiscal policy" and "tight monetary policy" in G. Soros' statement in his book The Alchemy of Finance?

I came across the following idea from George Soros' book The Alchemy of Finance which is also discussed in the book The New Market Wizards (by Jack D. Schwager) during the latter's interview of S. ...
TAH's user avatar
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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 ...
user6322383's user avatar
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2 answers
26k views

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 August 1st 2014?
user41154's user avatar
5 votes
1 answer
1k views

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 ...
Archil Zhvania's user avatar
5 votes
1 answer
141 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 ...
Tripanosomagambiense's user avatar
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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?
Marco Giosa's user avatar
-3 votes
2 answers
54 views

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?
Rohit sharma's user avatar
1 vote
0 answers
10 views

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 ...
Manar's user avatar
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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 ...
Lorenz's user avatar
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1 vote
2 answers
72 views

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, ...
hello_world's user avatar
0 votes
2 answers
97 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 ...
Tomahawk's user avatar
1 vote
2 answers
95 views

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 ...
user avatar
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1 answer
39 views

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 ...
milozeus's user avatar
4 votes
4 answers
689 views

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 ...
Sade Ifada's user avatar
4 votes
1 answer
54 views

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 ...
theanilpaudel's user avatar
0 votes
1 answer
33 views

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 ...
Lee's user avatar
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1 answer
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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 ...
Domi's user avatar
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0 votes
1 answer
199 views

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, ...
sylye's user avatar
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6 votes
2 answers
545 views

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 (...
q126y's user avatar
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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 ...
AlokR's user avatar
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0 answers
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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 ...
anotherfred's user avatar
0 votes
1 answer
21 views

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 ...
Trajan's user avatar
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-1 votes
2 answers
83 views

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 ...
Steven Mathey's user avatar
1 vote
1 answer
86 views

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 ...
Pkb's user avatar
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1 vote
1 answer
305 views

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 ...
EconLena's user avatar
2 votes
1 answer
90 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 ...
Kieran Edraney's user avatar
10 votes
3 answers
3k views

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 ...
Saaru Lindestøkke's user avatar
1 vote
0 answers
33 views

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-...
q126y's user avatar
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1 vote
0 answers
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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 ...
Dr Strangelove's user avatar
0 votes
1 answer
50 views

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 ...
AnyAD's user avatar
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1 vote
1 answer
925 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 ...
AnyAD's user avatar
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-1 votes
1 answer
603 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?
Yoda's user avatar
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2 votes
1 answer
284 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, ...
Oliver Williams's user avatar
1 vote
3 answers
6k 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: ...
Cerdicipe's user avatar
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1 vote
0 answers
70 views

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 ...
edam's user avatar
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-3 votes
1 answer
92 views

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 ...
Lassie Fair's user avatar
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4 votes
1 answer
381 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 ...
Lassie Fair's user avatar
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