COURSEWORK - Factors affecting the exchange rate

COURSEWORK

Factors affecting the exchange rate

CONTENTS

INTRODUCTION ...... 3
SECTION 1. THEORETICAL GENERAL INFORMATION EXCHANGE RATE
1.1. Monetary and exchange rate policy, exchange rate function .......... 5
1.2. Types of exchange rates .... 6
1.3. The procedure definition and the exchange rate regime ...... 12
1.4. Exchange rate ....... 14
SECTION 2. FACTORS AFFECTING THE FORMATION OF EXCHANGE RATE
2.1 The main factors influencing the exchange rate ... 14
2.2 Exchange rate regime ....19
2.3. Determinants of exchange rate formation of the state as the main element of its exchange rate policy .... 25
CONCLUSIONS .. 32
REFERENCES ..... 35
APPENDICES .... 37

Tables , figures are present.

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BUY

In this term paper the exchange rate , the types and characteristics of currency transactions. It also provides general description of adjustment of exchange rates and factors affecting the exchange rate , particularly in Ukraine .

Foreign exchange relations are part and one of the most difficult areas of the market economy. They focus of the national economy, whose development is historically parallel and intertwined . The system of exchange relations in a specific form implements and develops the monetary laws in force in the country. Foreign exchange relationships lead to a variety of foreign exchange transactions , each serving a certain kind of currency flows. Monetary system - a form of organization and regulation of monetary relations , enshrined in national law. National monetary system is an integral part of the monetary system of the country, although it is relatively independent and beyond the national boundaries .

International exchange of goods, services and capital necessitates the foreign exchange market. Importers exchange domestic currency for the currency of the country where they receive the goods and services. Exporters, in turn, received the export proceeds in foreign currency and sell it in exchange for local currency. Investors investing in the economy of a country , are in need of foreign currency. The exchange rate has a great influence on many macroeconomic processes taking place in society. From the level of the exchange rate by means of which matched the prices of goods and services made ​​in different countries , depending on the competitiveness of national products in global markets , exports and imports, and therefore the state of the current account balance .

The exchange rate affects the direction of international capital flows. The decision to invest in the domestic capital assets of a country taken based on the expected real return on investment , depending on the interest rate and the expected exchange rate changes .

The exchange rate is the object of macroeconomic policy. Use it often happens settlement payments. The exchange rate plays an important role in the design and conduct of monetary policy , as defined support level of the exchange rate may require the use of official foreign exchange reserves , which will inevitably affect the money supply in the economy. In countries with economies in transition in implementing programs stabilize the exchange rate can be used as a " nominal anchor " in the fight against high inflation or hyperinflation.

The problem of exchange rate in economic theory devoted a lot of papers. In particular, the development and research of the main factors that affect the exchange rate dynamics involved in such Western scholars as K.Makkonnell and S. Brue [ 9] B. Balassa and Paul Samuelson [16, 21] , D. Bahvati [17 ] , J. Keynes [3] and others.

However, it must be noted that in recent years a number of studies published local economists devoted to this issue. In particular, the exchange rate issue quite extensively and factors that influence this process are highlighted in the papers : F. Zhuravki [6-8 ] Y. Belinsky [ 1] T. Vakhnenko [2 ] F. Yu and stag Kurzy [11 12 ] E. Drachko - Yermolenko and I. Sakunovoyi [4].

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