FACTOID # 10: The total number of state executions in 2005 was 60: 19 in Texas and 41 elsewhere. The racial split was 19 Black and 41 White.
 
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Encyclopedia > Fixed exchange rate
Foreign Exchange

Exchange Rates
Currency band
Exchange rate
Exchange rate regime
Fixed exchange rate
Floating exchange rate
Linked exchange rate
In finance, the exchange rate (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how much one currency is worth in terms of the other. ... Image File history File links Newforex. ... The currency band is a system of exchange rates by which a floating currency is backed by hard money. ... The exchange rate regime is the way a country manages its currency in respect to foreign currencies and the foreign exchange market. ... A floating exchange rate or a flexible exchange rate is a type of exchange rate regime wherein a currencys value is allowed to fluctuate according to the foreign exchange market. ... A linked exchange rate system is a type of exchange rate regime to link the exchange rate of a currency to another. ...

Markets
Foreign exchange market
Futures exchange
The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. ... A futures exchange, or futures and options exchange is a corporation or mutual organization which provides the facilities to trade derivatives such as futures contracts and options. ...

Products
Currency
Currency future
Forex swap
Currency swap
Foreign exchange option
A currency future, also FX future or foreign exchange future, is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the last trading date. ... A Forex swap is an over the counter short term interest rate derivative instrument. ... A currency swap is a foreign exchange agreement between two parties to exchange a given amount of one currency for another and, after a specified period of time, to give back the original amounts swapped. ... In finance, a foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. ...


A fixed exchange rate, sometimes (less commonly) called a pegged exchange rate, is a type of exchange rate regime wherein a currency's value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold. As the reference value rises and falls, so does the currency pegged to it. A currency that uses a fixed exchange rate is known as a fixed currency. The opposite of a fixed exchange rate is a floating exchange rate. The exchange rate regime is the way a country manages its currency in respect to foreign currencies and the foreign exchange market. ... This article is on the monetary principle. ... A fixed currency, less commonly called a pegged currency, is a currency that uses a fixed exchange rate as its exchange rate regime. ... A floating exchange rate or a flexible exchange rate is a type of exchange rate regime wherein a currencys value is allowed to fluctuate according to the foreign exchange market. ...


Economists generally think that, in most circumstances, floating exchange rates are preferable to fixed exchange rates because floating rates are responsive to the foreign exchange market. In addition, fixed exchange rates deprive governments of the use of an independent domestic monetary policy to achieve internal stability. However, in certain situations, fixed exchange rates may be preferable for their greater stability. For example, the Asian financial crisis was ameliorated by the fixed exchange rate of the Chinese renminbi, and the IMF and the World Bank now acknowledge that Malaysia's adoption of a peg to the US dollar in the aftermath of the same crisis was highly successful. An economist is an individual who studies, develops, and applies theories and concepts from economics, and writes about economic policy. ... The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. ... The Asian financial crisis was a financial crisis that started in July 1997 in Thailand and affected currencies, stock markets, and other asset prices in several Asian countries, many considered East Asian Tigers. ... 100 Renminbi Yuan issued in 1999 The renminbi (Simplified Chinese: 人民币; Traditional Chinese: 人民幣; Pinyin: rénmínbì; literally peoples currency) or the yuan (Chinese: 元 or 圆; Hanyu Pinyin: yuán) is the official currency in the mainland of the Peoples Republic of China (PRC). ... The flag of the International Monetary Fund (IMF) The International Monetary Fund (IMF) is the international organization entrusted with overseeing the global financial system by monitoring foreign exchange rates and balance of payments, as well as offering technical and financial assistance when asked. ... Logo of the World Bank The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means...


Yet others argue that the fixed exchange rates (implemented well before the crisis) had become so immovable that it had masked valuable information needed for a market to function properly. That is, the currencies did not represent their true market value. This masking of information created volatility which encouraged speculators to "attack" the pegged currencies and as a response these countries to attempt to defend their currency rather than allow it to devalue. These economists also believe that had these countries instituted floating exchange rates, as opposed to fixed exchange rates, they may very well have avoided the volatility that caused the Asian financial crisis. Countries like Malaysia adopted increased capital controls believing that the volatility of capital was the result of technology and globalization, rather than fallacious macroeconomic policies which resulted not in better stability and growth in the aftermath of the crisis but sustained pain and stagnation.


Countries adopting a fixed exchange rate must exercise careful and strict adherence to policy imperatives, and keep a degree of confidence of the capital markets in the management of such a regime, or otherwise the peg can fail. Such was the case of Argentina, where unchecked state spending and international economic shocks disbalanced the system and ended up forcing an extremely damaging devaluation (see Argentine Currency Board and Argentine economic crisis). The capital market is the market for long-term loans and equity capital. ... Devaluation is a reduction in the value of a currency. ... The Argentine Currency Board pegged the Argentine peso to the US Dollar between 1991 and 2002 in an attempt to eliminate hyperinflation and stimulate economic growth. ... The Argentine economic crisis was part of the situation that affected Argentinas economy during the late 1990s and early 2000s. ...


Literature

  • Tiwari, Rajnish (2003): Post-Crisis Exchange Rate Regimes in Southeast Asia, Seminar Paper, University of Hamburg. (PDF)

  Results from FactBites:
 
NationMaster - Encyclopedia: Floating exchange rate (1014 words)
A fixed exchange rate, sometimes (less commonly) called a pegged exchange rate, is a type of exchange rate regime wherein a currencys value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold.
The opposite of a floating exchange rate is a fixed exchange rate.
To the extent that the exchange rate is determined by the trade balance, the exchange rate is counter-cyclical as the latter.
Exchange rate - Facts, Information, and Encyclopedia Reference article (939 words)
For example an exchange rate of 120 Japanese yen (JPY, ¥) to the United States dollar (USD, $) means that JPY 120 is worth the same as USD 1.
Exchange rates for such currencies are likely to change almost constantly as quoted on financial markets, mainly by banks, around the world.
The nominal exchange rate is the rate at which an organisation can trade the currency of one country for the currency of another.
  More results at FactBites »

 
 

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