Financial Education - State policies and macroeconomic scenario and exchange markets
In the state economic world, the exchange rate, which represents the price of a country's currency in terms of the currencies of other countries, influences a country's international trade. Countries, as part of their monetary policies, adopt various systems to regulate their exchange markets.
Especially in small open economies, exchange rate management is the most important macroeconomic policy, in other words, the exchange rate is nothing more than the ratio relationship that exists between one currency and how many units of one currency are needed to obtain one unit of the other.
Within the types of exchange rates, the fixed exchange rate aims to keep the ratio of the two currencies constant over time; that is, the amount of pesos needed to buy one dollar (or other foreign currency) is always the same.
Therefore, when there is a high demand in the market for dollars or any other currency (foreign currency), the Bank places in the market the amount of dollars necessary to maintain the exchange rate at the value determined.
Likewise, when there is excess supply (when there are more dollars in the market than are being demanded or requested), the Bank buys dollars to prevent the exchange rate from decreasing.
State policies operate in a large number of casesb,but exchange rates have similar pattern I guess. The more solid the state economy is, the better it is for local currency to have higher dominance on exchange matters .
Nice to read the few of wise discussion of economy .
There are actually some financial education that I wished I have learnt at the early stage of my life. It will have been much more better
Exchange market and the inflation rate of every country should be regularised but the issue is that the government are corrupt and most of the time always do and twist things so that it will just entered that which they need to want