Exam 10: Foreign Exchange Rate Determination and Forecasting

An important thing to remember about foreign exchange rate determination is that parity conditions, asset approach, and balance of payments approaches are ________ theories rather than ________ theories.

The single most important element of technical analysis is that future exchange rates are based on the current exchange rate.

Argentina's economic performance in the 1990s while their peso was pegged to the U.S. dollar can be characterized as ________ rates of inflation and ________ rates of unemployment.

The authors claim that random events, institutional frictions, and technical factors may cause currency values to deviate significantly from their long-term fundamental path.

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

Which of the following was NOT an international currency crisis in the 1990s and early 2000s?

It is safe to say that most determinants of the spot exchange rate are also affected by changes in the spot rate. i.e., they are linked AND mutually determined.

Describe the asset market approach to exchange rate determination. How is this consistent with economic theory of (say, security)prices in general?

Examples of a business motivation for long-run exchange rate forecasts include all but which of the following?

Short-term foreign exchange forecasts are often motivated by such activities as ________ whereas long-term forecasts are more likely motivated by ________.

The asset market approach to forecasting assumes that whether foreigners are willing to hold claims in monetary form depends on an extensive set of investment considerations. These include all but which of the following choices?

The Asian Currency crisis appeared to begin in ________.

The authors refer to the practice of many Asian firms being largely controlled by families of groups related to the governing body of the country as ________.

The ________ approach states that the exchange rate is determined by the supply and demand for national currency stocks, as well as the expected future levels and rates of growth of monetary stock.

________, traditionally referred to as chartists, focus on price and volume data to determine past trends that are expected to continue into the future.

Prior to July 2, 1997, the Thai government

In 1991 the Argentine peso was fixed to the value of the U.S. dollar on a one-to-one basis.

The more efficient the foreign exchange market is, the more likely it is that exchange rate movements are random walks.

Technical analysis of exchange rates developed in part due to the forecasting inadequacies of fundamental exchange rate theories.

The asset market approach to forecasting is not applicable to emerging markets.