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This paper explains that the primary factor affecting the exchange rate of a country adopting a floating exchange rate regime is the supply and demand of the respective currency on the international market. The paper then goes on to discuss the various factors that make the demand and supply vary, thus affecting the exchange.
From the Paper:"In the respective announcement, the public found out that the US economy had produced only 21,000 new jobs and none in the private sector, from the 150,000 that had been predicted previously. The signal this send the investors was quite clear: the US economy is not performing as well as we may have thought, it is not producing new workplaces (which would be a sign of rising business, as new employees would be needed). The subsequent devaluation of the US dollar was a natural psychological reaction from the investors."
Cite this Essay:
Exchange Rate (2005, September 27) Retrieved December 06, 2022, from https://www.academon.com/essay/exchange-rate-61315/
"Exchange Rate" 27 September 2005. Web. 06 December. 2022. <https://www.academon.com/essay/exchange-rate-61315/>