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Essay

Devaluation

Essay specific features

 

Issue:

Business

 

Written by:

Robert A

 

Date added:

October 6, 2012

 

Level:

University

 

Grade:

A

 

No of pages / words:

3 / 749

 

Was viewed:

2997 times

 

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Essay content:

However, if the trade deficit is offset by inflows of capital( for investment purposes), the country can continue to run the trade deficit without having to devalue. When a government devalues its currency, it is often because the interaction of market forces and policy decisions has made the currency's fixed exchange rate weak...
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In order to nourish a fixed exchange rate, a country must have sufficient foreign exchange reserves, often dollars, and be willing to spend them, to purchase all offers of its currency at the established exchange rate. When a country is unable or unwilling to do so, then it must devalue its currency to a level that it is able and willing to support with its foreign exchange reserves...
displayed 300 characters

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