ch10 (4) - Developing Countries Exchange rates in...

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Developing Countries Exchange rates in developing countries tend to be more volatile. Some countries adopted fixed exchange rate regimes, but were forced to abandon the peg after an exchange rate crisis. Many have adopted variants of fixed exchange rate regimes Managed float , designed to prevent dramatic changes in the exchange rate without committing to a strict peg. Crawl , where the exchange rate follows a trend, rather than a strict peg. 3. The Market for Foreign Exchange Understand some of the basic characteristics of the foreign exchange (FX) market Identify the types of contracts and the purposes of each in the economy. Spot, forward, and other derivatives Identify the private actors and how they use foreign exchange Commercial banks, large corporations, and nonbank financial institutions. Understand the role of government intervention Overview The foreign exchange market has no central organized market or exchange Over-the-counter trading (OTC) - bilaterally between two parties. Large market
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This note was uploaded on 03/02/2012 for the course EC 340 taught by Professor Ballie during the Spring '10 term at Michigan State University.

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ch10 (4) - Developing Countries Exchange rates in...

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