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economic effects of the foreign exchange rate. INTRODUCTION This paper tackles
the effects of the foreign exchange rate as a whole ...
... The economic effects of an exchange rate change on a foreign operation that is an
extension of the parent's domestic operations relate to individual assets ...
... long-run equilibrium path, there can be adverse effects on economic conditions such ...
2. Intervention (as a buyer or seller of foreign exchange) may help to ...
... This had three economic effects for Europe, strong domestic ... led to a decline in Economic
growth and ... buy domestic currency with its foreign exchange reserves to ...
... tightening of fiscal and monetary policy will reinforce these effects. (5) Economic
growth in ... Foreign exchange markets stabilise at their new lower prices, and ...
Submitted by raitan on January 31, 2007
Category: Social Issues
Words: 3653 | Pages: 15
Views: 325
Popularity Rank: 28,755
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INTRODUCTION
This paper tackles the effects of the foreign exchange rate as a whole and how it affects the country and at the same time how it gets affected. This paper enumerates the advantages and disadvantages of having a strong Peso. The paper also discusses what factors affect the strengthening and weakening of the Philippine Peso. This paper also includes an in depth analysis of how the foreign exchange could affect and gets affected by the economy, the society and politics.
OVERVIEW
The Philippine exchanged rate is express in terms of one unit of dollar versus one unit of peso. There are two cases on how an exchanged rate would be determined the first system is the free floating exchange rate where the supply and demand force of the market is the index and the other system is the fixed exchange rate given directly by Bangko Sentral ng Pilipinas. The free floating exchange rate would be given more consideration since it’s the system that mostly affect our economy and being supported by BSP adopted since 1970. In the cases when the demand and supply is not stable, the BSP has the authority to enter and provide guidance in the market to prevent the volatility effects in the exchange rate fluctuations that affects inflation. They also fixed firmly the demands for foreign currency by providing liquidity when required. This system applied in the Philippines is consistent with its goal to aim external competitiveness through market efficiency. Peso appreciation provides numerous benefits on our economy like lowering inflationary expectations or pressures and added additional savings resulted from foreign debt servicing but it also negatively affects the export market and the beneficiaries of the remittances given by the OFW.
The peso continues to struggle in the year 2005 but compared to 2004 it appreciated by 1.72%. The factors that affect the peso and help increase the standing of our economy are...
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