Determinants of Exchange Rates Differentials in Inflation As a - TopicsExpress



          

Determinants of Exchange Rates Differentials in Inflation As a general rule, a country with a consistently lower inflation rate exhibits a rising currency value, as its purchasing power increases relative to other currencies. During the last half of the twentieth century, the countries with low inflation included Japan, Germany and Switzerland, while the U.S. and Canada achieved low inflation only later. Those countries with higher inflation typically see depreciation in their currency in relation to the currencies of their trading partners. This is also usually accompanied by higher interest rates.
Posted on: Tue, 11 Jun 2013 22:27:50 +0000

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