Exchange rate regime thesis, exchange...

This paper takes another look at the evidence for this hypothesis using two popular de facto classifications of exchange rate regimes. Aikins Osei Factors affecting exchange rate in Ghana Introduction Exchange rates play a vital role in a country's level of trade, which is critical to almost every free market economy in the world. To achieve this objective, the following will be estimated; i. High volatility of the exchange rate in a short period of time may disturb exporters and importers who generally prefer a solid base for their calculations.

Simultaneously the central bank is concerned about the effect on the economy due to a volatile exchange rate fear of floating.

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Additional Metadata. In the third chapter I will show the toolbox of a central bank to influence its exchange rate. It is important to know, as a part of the shipping sector, which one of the exchange rate regimes case study number of participants be beneficial as a whole and how important exchange rate volatility is for maritime trade.

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The exchange rate exchange rate regime thesis purchasing power of income and capital gains derived from returns, income factors such as interest rates, inflation and even capital gains from domestic securities. Contribution of each independent variable individually and their collective impact on the dependant variable was will be estimated.

This study aims to explore the factors influencing exchange rate of Ghana Cedi.

  1. On the contrary, if the central bank thinks its exchange rate being too weak then the central bank buys the domestic currency and sells foreign exchange reserves.
  2. Therefore the exchange rate is pegged to a fixed value to a single foreign currency.
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Historically, the Military Regimes have tended to favour fixed exchange rate regimes to flexible whiles the democratically elected governments have favoured flexible exchange rate regimes. Ghana has gone through various exchange rate regimes; from fixed to flexible or floating.

The adjustment rate might depend on a specific rate e.

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Estimate the effect of interest rate on Cedi exchange rate iv. The difference between a managed floating and a target zone exchange rate is that in the first regime the central bank operates with hidden action and in the second one the central bank officially announces the target zone and commits to defend it.

This may lead to a lower inflation rate in the long run. A currency union is a special case of an exchange rate regime. With the advent of the floating exchange rate regime amongst major industrialized countries in the early s, an important advance was made with the development of the monetary approach to exchange rate determination. First, I will explain the different types of exchange rate regimes in the world.

International Finance and Macroeconomics Alexander Swoboda is one of the originators of the bipolar view that capital mobility creates pressure for countries to abandon intermediate exchange rate arrangements in favor of greater flexibility and harder pegs. The abandonment of its domestic currency also implies the abandonment of its monetary policy.

The paper presents some evidence for this exchange rate regime thesis, which suggests the feasibility of further movement by emerging markets and developing countries in the direct of greater exchange rate flexibility.

Thesis Proposal: Cedi exchange rate | Aikins Osei -

The exchange rate of the currency determines the real return of the portfolio that holds the bulk of its investment. Not many papers have been found that clearly mention that a particular exchange rate regime and subsequent volatility has an impact on maritime international trade.

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Another variable that is important in determining exchange rates is central bank intervention in the foreign exchange market. Realignments of the central parity are possible and may happen in the case of a violation of the equilibrium e.

Exchange Rate Regimes and Capital Mobility: How Much of the Swoboda Thesis Survives?

The depreciating Cedi will add further pressure on the overall domestic inflation and since Ghana is structurally an import intensive country, as reflected in the high and persistent current account deficits month after month, the domestic costs will rise on account of Cedi depreciation.

High volatility of the exchange rate in a short period of time may disturb exporters and importers who generally prefer a solid base for their calculations. Balance of payment, inflation and interest rates are some of the macroeconomic factors that have influenced any political regime to adopt any form of exchange rate regime.

Estimate the effect of Civilian regime on the Cedi exchange rate vi.

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With liberalization and development of foreign exchange and assets markets, variables such as capital flows, volatility in capital flows and creative writing parks premium have also became important in determining exchange rates. Review of Literature and Earlier Studies In the international finance literature, various theoretical models are available to analyse exchange rate determination and behaviour.

A lack of credibility concerning the monetary policy of the central exchange rate regime thesis in the past is the main reason why countries choose such an extreme exchange rate regime.

How do alternative exchange rate regimes operate and how can they be identified?

Target zones and bands of fluctuation In this regime the exchange rate is allowed to fluctuate within a specific range. The main advantage of this regime is that the central bank ap english argumentative essay tips able to use its monetary policy to full capacity as the central bank does not look at its exchange rate.

A fixed exchange rate has two major benefits compared to a floating exchange rate. Literally the endpoints crawl.

Exchange Rate Regimes and Capital Mobility: How Much of the Swoboda Thesis Survives?

Justification of the Study Exchange rate affects trading relationships between two nations. If stable it makes the trade of goods and assets between countries easier and less costly.

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Some of the principal factors that cause fluctuations in exchange rate between two countries are inflation, interest rates, and current account deficits. The central bank has to act accordingly; meaning the central bank has to defend the central parity with interventions.

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Exchange rate regime thesis monetary authority declines to have any responsibility concerning its exchange rate and does not intervene in foreign exchange markets. For instance a worsening balance of payment may compel political authority to either adopt a flexible or fixed exchange rate regime aimed at correcting the problem.

Notwithstanding the political regime in place, there are underlying economic factors that have influenced the decision to adopt exchange rate regime thesis form of exchange rate regime. Exchange rate affects basic resume cover letter format relationships between two nations. Many nations followed suit with their own currencies.

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A band of fluctuation and a target zone give the central bank more flexibility concerning interventions as the central bank does not have to defend one particular exchange rate. The key characteristic of a crawling peg regime is that the endpoints of the band of fluctuation are allowed to slide regularly. Ghana has adopted inflation targeting and has less flexible exchange rate arrangements.

Higher interest rates attract foreign capital and cause the exchange rate to rise and lower interest rates decrease exchange rates.

  • Many nations followed suit with their own currencies.
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In this view, other countries are unlikely to abandon soft pegs because of the absence of the distinctive political conditions that have made the European alternative feasible. One interpretation of the contrast is that there is a tendency to move away from intermediate business plan for 24 hour fitness in the course of economic and financial development, implying that emerging markets and other developing countries will eventually abandon intermediate regimes as well.

Ghana Cedi in the terminal year has depreciated by nearly two thirds of its value in the base year.

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Unfortunately only two features at the same time can be realized. In the last part of the third chapter I will show briefly the different instruments using the example of Switzerland in the recent past. The main advantage of a dollarization is an increase of credibility of the country as the country is not able to misuse monetary policy.

We also find that the effect of exchange rate volatility on bilateral maritime trade flows is insignificant, even though we have looked at six different definitions of exchange rate volatility.

Thesis- Martin Belchev- Exchange Rate Regime Choice in Developing Cou…

A final interpretation is that the advanced countries have been able to abandon soft peg because of their success in substituting inflation targeting for exchange rate targeting as the anchor for monetary policy.

A whole literature followed on the economic impact of exchange rate regimes and exchange rate volatility. The exchange rate regime thesis Cedi has serious effects on the external debt figures ofthe nation. Internally exists one once fixed exchange rate and externally the regional exchange rate regime thesis bank may use any exchange rate policy e.

Exchange rate risk also drives away foreign investors which in turn depreciates the local currency.


Therefore the exchange rate is pegged to a fixed value to a single foreign currency. Most of the studies on exchange rate models prior to the swere based on the fixed price assumption. II Theoretical background In this chapter I will give some theoretical background for the topic itself.

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Currency boards Essay on information technology revolution currency board is a relatively extreme case of a fixed exchange rate regime.

This paper takes another look at the evidence for this hypothesis using two popular de facto classifications of exchange rate regimes. The focus of this research, therefore, is to understand and analyze the impact of such exchange rates regimes and subsequent exchange rate volatility on bilateral maritime trade flows.

When designing your case study, be sure you have thoroughly addressed all aspects of the problem and do not leave gaps in your analysis.

To achieve this objective, the following will be estimated; i. According to the impossible trinity principle a country desires a fixed exchange rate, an autonomous monetary policy and full capital mobility simultaneously. The base for the analysis is data on exchange rate variability compared to the officially announced bands of fluctuation and inflation in the country.

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