Exam 8: Foreign Exchange Rate Determination

The principle focus of the IMF bailout efforts during the Asian financial crisis was

The ________ approach to the determination of spot exchange rates hypothesizes that the most important factors are the relative real interest rate and a country's outlook for economic growth and profitability.

In the years immediately preceding 1998 the Russian Ruble operated under a ________ type of exchange rate regime.

Assume your country has a balance of payments surplus. How would the government and markets react to "correct" this imbalance under a fixed exchange rate regime? Under a floating exchange rate regime?

Foreign exchange forecasting can be either long-term, or short-term in duration. Compare and contrast the motivation for and the techniques a forecaster might use for each of the time periods.

"Overshooting" exchange rate changes in response to an action of the Federal Reserve would be an example of

In the long run, exchange rates will never follow a fundamental equilibrium path as suggested by the fundamental theories of exchange rate determination.

If the Central Bank's goal was to decrease the value of its currency, or to fight an appreciation of its currency's value on the foreign exchange market, the bank could

The Chinese government announces that on December 31, 2006 the value of the Yuan will officially change from 6.40 Yuan/$ to 6.00 Yuan/$. This would be an official ________ of the Chinese currency of ________.

There is a long-standing saying that "what worries bankers is unemployment, but what worries elected officials is inflation."

The longer the time horizon of the technical analyst the more accurate the prediction of foreign exchange rates is likely to be.

________ is the official Chinese currency.

________ is the alteration of economic or financial fundamentals which are thought to be drivers of capital to flow in and out of specific currencies.

The ________ approach argues that exchange rates are determined by the supply and demand for a wide variety of financial assets

Indirect intervention is

After the Russian government (in August 1998) allowed the Ruble to move outside its official trading range of between Ru5.70/$-Ru6.35/$, the value of the Ruble eventually ________ to around ________ by May 1999.

A currency board is

The "tequila effect" is a slang term used to describe a form of financial panic called