Suppose government officials in a small open economy decided they wanted their currency to weaken in order
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Suppose government officials in a small open economy decided they wanted their currency to weaken in order to boost exports. What kind of foreign exchange market intervention would they have to make to cause their currency to depreciate? What would happen to domestic interest rates in that country if its central bank doesn’t take any action to offset the impact on interest rates of the foreign exchange intervention?
Foreign Exchange MarketThe foreign exchange market (also known as forex, FX or the currency market) is an over-the-counter (OTC) global marketplace that determines the exchange rate for currencies around the world. Participants are able to buy, sell, exchange and...
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Money Banking and Financial Markets
ISBN: 978-1259746741
5th edition
Authors: Stephen Cecchetti, Kermit Schoenholtz
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