Forex Rate Essay

1973 WordsSep 20, 20128 Pages
Question: What is an exchange rate? Are terms like managed float, dirty float, fixed exchange rates, floating exchange rate, pegged exchange rate, crawling peg the same? Which type of exchange rate regime does India follow? What is a currency crisis? In recent times the rupee is becoming weaker against the dollar every day, what are the reasons for the same and what steps is the RBI taking to control the same. So, is the rupee depreciating or devaluing against the dollar? Support your conclusion by giving a dollar rupee graphical trend for the last three months. Answer: Trade and Exchange are probably older than the invention of money, but in the absence of this wonderful contrivance the volume of trade and gains from specialization would have been rather miniscule. Exchange rate is a key determinant in international finance and turning of world into a global village has just made this variable all the more important.. A foreign exchange rate is the relative value between two currencies. In particular, the is exchange rate the quantity of one currency required to buy or sell one unit of the other currency. In finance, an exchange rate (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency. Are terms like managed float, dirty float, fixed exchange rates, floating exchange rate, pegged exchange rate, crawling peg the same? Exchange rates are determined by demand and supply. But governments can influence those exchange rates in various ways. The extent and nature of government involvement in currency markets define alternative systems of exchange rates. Free-Floating Systems In a free-floating exchange rate system, governments and central banks do not

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