Please enable JavaScript.

Coggle requires JavaScript to display documents.

4.1.8 EXCHANGE RATES, image, image, image, image, image, image, image,…

- - - - -Interest rates are reserved for domestic monetary policy only, to control inflation.
      - -Can auto correct a trade deficit, as high imports can cause weak pound.
      - -Can reduce speculation as that is more effective when overvalued or undervalued.
- - - - -FOR
      - -Fixed exchange rate is good as investors know true cost of the deal.
      - -Less costs associating with hedging and forward exchange rates.
      - -AGAINST
      - -If the currency is falling below a fixed the level the government have to intervene with interest rates.