文档介绍：Chapter 13
Exchange Rates and the Foreign Exchange Market:An Asset Approach
1
Introduction
Exchange Rates and International Transactions
The Foreign Exchange Market
The Demand for Foreign Currency Assets
Equilibrium in the Foreign Exchange Market
Interest Rates, Expectations, and Equilibrium
Summary
anization
2
Introduction
Exchange rates are important because they enable us to translate different counties’ prices parable terms.
Exchange rates are determined in the same way as other asset prices.
The general goal of this chapter is to show:
How exchange rates are determined
The role of exchange rates in international trade
3
Exchange Rates and International Transactions
An exchange rate can be quoted in two ways:
Direct
The price of the foreign currency in terms of dollars
Indirect
The price of dollars in terms of the foreign currency
4
Exchange Rates and International Transactions
Table 13-1: Exchange Rate Quotations
5
Domestic and Foreign Prices
If we know the exchange rate between two countries’ currencies, we pute the price of one country’s exports in terms of the other country’s money.
Example: The dollar price of a £50 sweater with a dollar exchange rate of $ per pound is ( $/£) x (£50) = $75.
Exchange Rates and International Transactions
6
Two types of changes in exchange rates:
Depreciation of home country’s currency
A rise in the home currency prices of a foreign currency
It makes home goods cheaper for foreigners and foreign goods more expensive for domestic residents.
Appreciation of home country’s currency
A fall in the home price of a foreign currency
It makes home goods more expensive for foreigners and foreign goods cheaper for domestic residents.
Exchange Rates and International Transactions
7
Exchange Rates and Relative Prices
Import and export demands are influenced by relative prices.
Appreciation of a country’s currency:
Raises the relative price of its exports
Lowers the relative price of its imports
Depreciat