In spite of what they believe is an obvious connection between the currency exchange rate and the trade deficit with China, the empirical evidence does not support such a connection.
The Minister instructed the teller that there was to be a new and more favorable currency exchange rate for the day and the financial instrument was to be converted at this new rate.
Senator Charles Grassley of Iowa, the ranking Republican on the Finance Committee, said the American political establishment needed to keep the pressure on China until it takes concrete actions to appreciate its currency exchange rate in a meaningful way.
If a central bank buys foreign currency to hold down the exchange rate of the domestic currency, it creates more domestic money.
Ending a national currency and an exchange rate means that an exchange-rate crisis is not possible.
Like any fixed exchange-rate system, a currency board offers the prospect of a stable exchange rate, which can promote both trade and investment.
Ecuador dollarized its currency, pegging the exchange rate of its peso to the dollar, and Panama has used the dollar alongside its own currency for decades.
Co-ordinating a European response amid a series of currency crises or exchange-rate rows would have been far trickier.
By devaluing a currency in a floating exchange rate environment, the result is that trade booms and foreign reserves balloon.
The crises of the 1990s did, however, tend to have one thing in common: they all had some kind of fixed exchange rate, often a fixed peg or link to another currency, usually the dollar, or an exchange-rate band, again usually linked to the dollar.
He announced a series of currency controls and fixed the exchange rate against the dollar (see article).
Heavy subsidies to energy and water prices have been reduced and, last October, the government finally made its currency convertible and unified the exchange rate.
Mundell is proposing, in effect, a de facto super-regional currency area by managing the exchange rate between the dollar and the euro through a process of central bank coordination.
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Since the rules were introduced in November 2011, Paypal has been used as an alternative means of obtaining the US currency close to the official exchange rate, which currently stands at about 4.7 pesos per dollar.
More broadly, in the United States, for example, the dollar made artificially expensive by capital inflows related in part to its reserve currency status has prevented the exchange rate adjustment needed to balance our trade in goods and services.
"When you are creating a currency whose purpose is to be unregulated and then that currency gains value and its exchange rate with the dollar or the pound sterling increases, then clearly this is going attract all sorts of people who want to launder their illicitly earned money, " he says.
Currency crises might also occur because pegging the exchange rate requires governments to use monetary policy in order to maintain the currency's value.
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Hong Kong manages its exchange rate through a currency board, which holds one American dollar to back every 7.8 dollars in Hong Kong's money supply.
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Holders of precious metals or other major tradable (fungible) assets worldwide need to monitor the foreign exchange rate of the currency in which their asset is held.
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The central bank had tried selling the currency at that level on the interbank market for foreign currency, which is how its exchange rate is normally determined, but gave up when no one would buy it.
Already, many French banks and Dutch and Spanish ones put the final balance on people's bank statements in euros, working on a rough conversion: the exact exchange rate for each currency will be fixed on January 1st 1999.
But funds hope it marks a big change when concerted policy easing by some central banks, including the European Central Bank and Federal Reserve, squashed the gaps between different countries' interest rates, depressing currency-trading volumes and exchange-rate shifts.
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Under a currency board arrangement, the central bank guarantees the redemption of all notes in circulation at a set exchange rate to the dollar or another foreign currency or basket of currencies.
Like other fixed exchange-rate systems, currency boards prevent governments from setting their own interest rates.
Encouragingly, a recent poll for the European Commission says that 84% know the exchange rate against their national currency to within five cents in the euro.
Some money-watchers have suggested that while Hong Kong continues to publicly stand by the linked-exchange rate peg of its currency to the U.S. dollar, behind the scenes it may be looking for alternatives.
The step faces several pitfalls, though, and could have unintended consequences, including an unstable exchange rate or a strengthening currency that hobbles the country's nascent export sector just as the country is re-entering the global economy.
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