This BBC article clearly shows the importance of hot money flows in determining the exchange rate
http://news.bbc.co.uk/1/hi/business/7340272.stm
a) Using a S&D diagram, explain how the actions of speculators as a result of the decrease in interest rates leads to a fall in the exchange rate
b) What is the likely effect on imports, exports and the balance of trade in goods and services?
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment