We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

With specific reference to the UK economy over the past 20 years, critically discuss the relative advantages and disadvantages of operating a floating exchange rate regime - Essay Example

Comments (0)
Summary
Flexible or floating exchange rate system, fixed exchange rate system and managed floating exchange system. In a system, of fixed exchange rate, the…
Download full paper
GRAB THE BEST PAPER
With specific reference to the UK economy over the past 20 years, critically discuss the relative advantages and disadvantages of operating a floating exchange rate regime
Read TextPreview

Extract of sample
With specific reference to the UK economy over the past 20 years, critically discuss the relative advantages and disadvantages of operating a floating exchange rate regime

Download file to see previous pages... In a floating exchange rate system, the market forces determine the value of the currency; that is, by the interactions of several of banks, firms and other institutions seeking to sell and buy currency for the purposes of clearing transactions, arbitrage, hedging, and speculation. In October 1990, the UK joined the European Exchange Rate Mechanism (ERM), where the Sterling Pound was fixed against other currencies. In September 1992, UK left the ERM when the pound experienced sustained selling pressure, and the monetary authorities could no longer justify extremely high interest rates to maintain the value of the pound, when the domestic economy was under a deep recession. Since 1992, UK has adopted a flexible exchange rate system; there is no official intervention by the Bank of England to the currency markets to attain the desired level of exchange rate (Roderick & Paul 2004, p.143).
The following are the key arguments in favor of a flexible exchange rate. First, reduced necessity for currency reserves; there is no target for an exchange rate level meaning there is little necessity for the Bank of England to hold large scale reserves of foreign currency and gold to use in possible official intervention, in the currency markets. However, in the real world, for example, in UK, the government always has some currency reserves, in case of balance of payments crisis, or the sentiment that the Sterling Pound is getting a bit too low or too high (Karl 2010, p.182). Second, useful tool of macroeconomic adjustment; a floating exchange rate may act as a useful instrument of macroeconomic adjustment. For example, depreciation of the currency should provide a boost in demand of net exports and thereby stimulate growth. This assumes that the higher wage claims or export prices do not dissolve the achievements from a low exchange rate as noted ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
The value of the UK pound is currently determined on a floating exchange rate system, but in the past has been determined on a f
Like other industrialised states, the UK economy adopted the fixed exchange rate system to manage pound when this system was introduced. However, to strengthen the value of pound, the UK government adopted the floating exchange rate system. Therefore, from 1944 to 1972, UK adopted the fixed exchange rate system to manage pound and from 1992 to 2001, UK government adopted the floating exchange rate system (Tutor2u).
5 Pages(1250 words)Essay
Japan Exchange Rate Regime
However, the administration was carried out with the cooperation of the Ministry of International Trade (MITI) and Industry and the bank of Japan. MITI also handled licenses related to exports and imports. However, the authority for approving major payments was given to the authorized banks in Japan.
5 Pages(1250 words)Essay
Critically discuss the advantages and disadvantages of the outdoor learning environment in the UK's Early Years
In many nations across the globe, early childhood education has been prioritized in terms of provision of recommendations and allocation of resources. Educational bodies across the globe have also played an important role in ensuring early childhood education is effectively delivered.
3 Pages(750 words)Essay
Floating and Fixed Exchange Rate Regimes
These schemes have achieved at least some achievement as numerous countries in the area have experienced financial recovery with convenient inflation. Despite this development, troubles remain. The most of note issue is the monetary vulnerabilities as exemplified by the fall down of the Mexican peso.
4 Pages(1000 words)Essay
Floating Exchange Rate
A floating exchange rate, also called s flexible exchange rate is "a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market" (Wikimedia Foundation, Inc). In the field of economics, we say that it is "determined by the private market through supply and demand" (Investopedia).
5 Pages(1250 words)Essay
Discuss the pros and cons of floating against fixed exchange rate regime using the Mundell-Fleming and the Dornbusch models
Under fixed exchange rate regime, the central bank of a country cannot use independent monetary policy as a policy measure. (Obstfeld and Stockman, 1985) Suppose the central bank of a country under
4 Pages(1000 words)Essay
Greek and spanish economy over the past three years
Scenario analysis will be based on observations since the last three years, i.e., from 2007. While the political aspect is judged on the basis of the performance of the
12 Pages(3000 words)Essay
Exchange rate regime in Kazakhstan
mitted to Kazakhstan through channels which include, "lost competitiveness, shrinking bilateral and global markets, terms of trade shocks and shifting foreign direct investments"(Ohno and Zhakparova, 1999, p.1).With the adoption of floating regime, temporary non-market steps
8 Pages(2000 words)Essay
Tanya Stivers
These presentations are devised to seek medical evaluation for the children. Stivers takes an empirical analytic approach in research for the study conducted, Stivers comparatively samples audio recordings and video recordings from the visits of the physicians. There were
1 Pages(250 words)Essay
Fixed and Floating Exchange Rate Systems
rate systems allows the currency conversion rates to auto-correct the rate of conversion of one currency into another depending on the fluctuation of the economic demands. The fixed exchange rate system is also termed as the pegged exchange rate system where one currency is
3 Pages(750 words)Essay
New Product in Marketing Aspect
In addition, the company offers huge discounts to members, who order regular deliveries of grocery and perishable goods, hence making it difficult to earn profits on such huge discounts (Stewart, 2014). Similarly, the company offers reduced prices on Kindle and
1 Pages(250 words)Assignment
Let us find you another Essay on topic With specific reference to the UK economy over the past 20 years, critically discuss the relative advantages and disadvantages of operating a floating exchange rate regime for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us