Exam 9: Foreign Exchange Rate Determination and Forecasting

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

Critics of the balance of payments approach to exchange rate determination point to the emphasis on ________ of currency and capital rather than ________ of money or financial assets.

The authors claim that theoretical and empirical studies appear to show that fundamentals do apply to the long-term for foreign exchange.

Explain how a central bank would engage in direct intervention to decrease the value of its domestic currency. Since the 1970s it has been difficult for central banks alone to engage in direct intervention to alter the value of their domestic currency. Identify and explain at least two other activities in which a central bank could engage to alter the value of their domestic currency.

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.

Which of the following did NOT contribute to the Russian currency crisis of 1998?

________ is defined as the spread of a crisis in one country to its neighboring countries and other countries with similar characteristics.

Prior to July 2, 1997, the Thai government:

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.

The International Monetary Fund, as one of its basic principles (Article IV), encourages members to pursue "currency manipulation" to gain competitive advantages over other members as opposed to engaging in military action to achieve the same advantage.

The authors did NOT identify which of the following as a root of the Asian currency crisis?

The Asian Currency crisis appeared to begin in: