rate policy has been sustainable like Europe’s exchange rate policy in the early 20th century and Japan’s exchange rate policy after World War II. Recently, Economic purposes such as restoring slowdown of economy due to financial crisis and recovery of trade deficit are combined with political purpose and retaliatory currency manipulation in china and U.S. is on the rise. Extreme fluctuations
Ⅱ. Exchange rate regime
1. What is the exchange rate?
In finance, the exchange rates between two currencies specifies how much one currency is worth in terms of the other. It is the value of a foreign nation’s currency in terms of the home nation’s currency. For example an exchange rate of 91 Japanese yen (JPY, ¥) to the United States dollar (USD, $) means that 91 yen is worth the
Rate With Respect to Global Oil Price Change
To see the relationship between exchange rate and oil price, we use econometrical methodology, multiple regression. Our regression model is this:
s_t=β_1+β_2 (m_t-m_t^* )+β_3 (y_t-y_t^* )+β_4 〖lroil〗_t+u_t
*Explanation about explanatory variable
s_t : Nominal exchange rate (USD/Won)
m_t-m_t^* : The U.S. money supply (m_t)rela
rate. By using invest experts, they buy foreign bonds. It also contains FX margin trading.
The broadest meaning of Yen carry trade is that central banks of each country are reducing the deal of weight on Japanese Yen. Central banks consider the low interest rate of Japanese Yen and expect the continuing weakness of it. Then, they lower the portion of Yen in the foreign exchange reserves by se
is the 14th largest export destination for the USA and the eighth
largest foreign investor in the USA.
Increasing exports of Australia brings us AUD dollar appreciation, but from the above
chart,Australia’s export to the US seems insignificant compared to its imports to the
U.S. Therefore, we can’t extract our expectation from this data.
②Interst rate(Australia > United