3

You are wrong/vague here: the rupee (INR), is appreciating against, say, the USD, it possibly means that there is a high demand for the former. If the rupee becomes more expensive w.r.t. the dollar, demand for the rupee usually decreases, as Indian exports are now more expensive to pay for when measured in dollars, and hence fewer people seek to convert ...


3

No by definition forex is not bartering. By definition (see here) bartering is Barter is an act of trading goods or services between two or more parties without the use of money (or a monetary medium such as a credit card). In essence, bartering involves the provision of one good or service by one party in return for another good or service from another ...


2

One possible flaw in your reasoning is your assumption about what happens to bond prices when there are capital inflows. For example , suppose that the Bank of England has fixed short term interest rates at 1%, and that the yield of 5yr gilts is also 1%. Then there is a sudden unexpected rise in the Bank of England rate to 1.5%, resulting in capital ...


2

The trade in itself was not that much different per se but it was restricted and overseen by the government. For example, USSR was net oil exporter and most of its oil was sold for US dollars at international market prices and then USSR used dollars to buy imports that government officials decided to import. For example, you can see overview of trade in ...


1

" Does that not mean a lot of rupees flowing into circulation in the country?" no. it means other currencies are flowing into the country, eg USD. then locals will go to their banks and exchange USD for RUPEE. There will be no new RUPEES created (unless the crazy scenario of all the banks run out rupee and them needing the central bank to print ...


1

This looks good assuming that your country is a small country (i.e., the change in the domestic demand of foreign assets does not change the interest rate in the foreign country). To be clear on the full story, at point A, we have that the foreigners want domestic assets, and so that's why foreigners demand more domestic currency, and that's why (as you said)...


1

Central bank of the country just declares that it will exchange local money for the foreign money at fixed exchange rate. You can just look up definition of currency peg.


1

The "US-China trade deficit" isn't a real thing. Yes, there are some transactions classified as "exports from US to China" and others classified as "exports from China to the US", and you can subtract the latter from the former and get a negative number, but that doesn't represent anything fundamental about the world economy. ...


Only top voted, non community-wiki answers of a minimum length are eligible