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TOPIC 3: EXCHANGE RATE DETERMINANTS AND FORECASTING - Coggle Diagram
TOPIC 3: EXCHANGE RATE DETERMINANTS AND FORECASTING
International Monetary Fund (IMF)
Purpose
promote exchange stability
to maintain orderly exchange arrangements among members
to avoid competitive exchange depreciation
The International Monetary Fund (IMF) is an international organization that promotes global economic growth and financial stability, encourages international trade, and reduces poverty. Quotas of member countries are a key determinant of the voting power in IMF decisions.text
Advantages
Provides Loans to Member Nations
Fills Deficit Gaps
Technical Support and Assistance
Disadvantages
Too Much or Too Little Intervention
Creates Moral Hazard
Roles of IMF
Monitoring Member Country Economies
Lending
Technical Assistance
Fiscal policy
Monetary and exchange rate policies
Banking and financial system supervision and regulation
Statistics
Inflation rates
the percentage change of a price index over time
to measure the overall impact of price changes for a diversified set of products and services,
allows for a single value representation of the increase in the price level of goods and services in an economy over a period of time
Interest Rates
the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed.
Income levels
Amount of money earned by people over a given period of time (typically, a month).
Gonverments control
Fixed Rates
rate the government (central bank) sets and maintains
Capital Flow
the movement of money for the purpose of investment, trade, or business operations
foreign direct investment (FDI)
foreign portfolio investment (FPI)
debt