What Determines Exchange Rates? Floating rate currency system: Since 1973. the world has allowed exchange rates to change daily in response to market forces Exchange rates are affected by: foreign investors speculators, political conditions here and overseas, inflation trade policies(tariffs and quotas), and
What Determines Exchange Rates? Floating Rate Currency System: Since 1973, the world has allowed exchange rates to change daily in response to market forces. Exchange rates are affected by: • foreign investors, • speculators, • political conditions here and overseas, • inflation, • trade policies (tariffs and quotas), and
What Determines Exchange Rates? Supply and demand for currencies. Let's consider the i/s market
What Determines Exchange Rates? Supply and Demand for currencies! Let’s consider the £ / $ market