Академический Документы
Профессиональный Документы
Культура Документы
Payments and
Exchange Rates
The Balance of Payments Account
4
Current account balance:% of GDP
-1
-2
-3
-4
-5
1970 1975 1980 1985 1990 1995 2000
Current account balance as % of
GDP in selected countries: 1970–2003
5
4
Current account balance:% of GDP
0
UK
-1
-2
-3
-4
-5
1970 1975 1980 1985 1990 1995 2000
Current account balance as % of
GDP in selected countries: 1970–2003
5
4
Current account balance:% of GDP
0
UK
-1
-2
-3
USA
-4
-5
1970 1975 1980 1985 1990 1995 2000
Current account balance as % of
GDP in selected countries: 1970–2003
5
4
Current account balance:% of GDP
2
Japan
1
0
UK
-1
-2
-3
USA
-4
-5
1970 1975 1980 1985 1990 1995 2000
The Balance of Payments Account
2.20
2.00
1.80
$ price of £
1.60
1.40
1.20
1.00
0 Q of £
Determination of the rate of exchange
2.20
2.00
1.80
$ price of £
1.60
1.40
1.20
D by USA
1.00
0 Q of £
Determination of the rate of exchange
S by UK
2.20
2.00
b a
1.80
$ price of £
1.60
1.40
1.20
D by USA
1.00
0 QD QS Q of £
Determination of the rate of exchange
S by UK
2.20
2.00
1.80
$ price of £
1.60
d c
1.40
1.20
D by USA
1.00
0 QS QD Q of £
Exchange Rates
• The rate of exchange
– individual rates of exchange
– exchange rate index
• Determination of exchange rates
– the equilibrium exchange rate
– appreciation and depreciation
Exchange Rates
• The rate of exchange
– individual rates of exchange
– exchange rate index
• Determination of exchange rates
– the equilibrium exchange rate
– appreciation and depreciation
– shifts in currency demand and supply
Floating exchange rates: movement to a new equilibrium
1.80 S1
1.60
1.40
€/£
1.20
1.00 D1
0.80
0.60
0 Q of £
Floating exchange rates: movement to a new equilibrium
1.80 S1
1.60 S2
1.40
€/£
1.20
1.00 D1
0.80
0.60
0 Q of £
Floating exchange rates: movement to a new equilibrium
1.80 S1
1.60 S2
1.40
€/£
1.20
1.00 D1
0.80 D2
0.60
0 Q of £
Exchange Rates
• The rate of exchange
– individual rates of exchange
– exchange rate index
• Determination of exchange rates
– the equilibrium exchange rate
– appreciation and depreciation
– shifts in currency demand and supply
• differences in interest rates
Floating exchange rates: movement to a new equilibrium
1.80 S1
1.60 S2
1.40
€/£
1.20
1.00 D1
0.80 D2
0.60
0 Q of £
Exchange Rates
• The rate of exchange
– individual rates of exchange
– exchange rate index
• Determination of exchange rates
– the equilibrium exchange rate
– appreciation and depreciation
– shifts in currency demand and supply
• differences in interest rates
• differences in inflation rates
Floating exchange rates: movement to a new equilibrium
1.80 S1
1.60 S2
1.40
€/£
1.20
1.00 D1
0.80 D2
0.60
0 Q of £
Exchange Rates
• The rate of exchange
– individual rates of exchange
– exchange rate index
• Determination of exchange rates
– the equilibrium exchange rate
– appreciation and depreciation
– shifts in currency demand and supply
• differences in interest rates
• differences in inflation rates
• relative investment prospects
Floating exchange rates: movement to a new equilibrium
1.80 S1
1.60 S2
1.40
€/£
1.20
1.00 D1
0.80 D2
0.60
0 Q of £
Exchange Rates
• The rate of exchange
– individual rates of exchange
– exchange rate index
• Determination of exchange rates
– the equilibrium exchange rate
– appreciation and depreciation
– shifts in currency demand and supply
• differences in interest rates
• differences in inflation rates
• relative investment prospects
• change in aggregate demand
Floating exchange rates: movement to a new equilibrium
1.80 S1
1.60 S2
1.40
€/£
1.20
1.00 D1
0.80 D2
0.60
0 Q of £
Exchange Rates
• The rate of exchange
– individual rates of exchange
– exchange rate index
• Determination of exchange rates
– the equilibrium exchange rate
– appreciation and depreciation
– shifts in currency demand and supply
• differences in interest rates
• differences in inflation rates
• relative investment prospects
• change in aggregate demand
• speculation
Floating exchange rates: movement to a new equilibrium
1.80 S1
1.60 S2
1.40
€/£
1.20
1.00 D1
0.80 D2
0.60
0 Q of £
Exchange Rates and Balance of Payments
$2.20 140
130
$2.00
120
$1.80
110
$1.60
100
$1.40
90
$1.20 80
$1.00 70
1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
$ / £ exchange rate and £ exchange rate index: 1976-2003
$/£
$2.40 150
$2.20 140
130
$2.00
120
$1.80
110
$1.60
100
$1.40
90
$1.20 80
$1.00 70
1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
$ / £ exchange rate and £ exchange rate index: 1976-2003
Index
$/£ 1990=100
$2.40 150
$2.20 140
130
$2.00
120
$1.80
110
$1.60
100
$1.40
90
$1.20 80
$1.00 70
1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
$ / £ exchange rate and £ exchange rate index: 1976-2003
Index
$/£ 1990=100
$2.40 150
$2.20 140
130
$2.00
120
$1.80
110
$1.60
100
$1.40
90
$1.20 80
$1.00 70
1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
The Origins of the Euro
US interest
rate
Fluctuations between the euro and the dollar
US interest
rate
ECB
interest rate
Fluctuations between the euro and the dollar
US interest
$/€ rate
ECB
interest rate
$/€
Globalisation and the Problem of Instability
• Financial interdependence
– size of international financial flows
• Rescheduling debt
– rescheduling official loans
– rescheduling commercial bank loans
Debt and Developing Countries