Essay Speculative attacks on fixed exchange rates

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Issue:

Miscellaneous

 

Written by:

Teresa B

 

Date added:

October 19, 2012

 

Level:

University

 

Grade:

A

 

No of pages / words:

9 / 2256

 

Was viewed:

628 times

 

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Essay content:

Obviously, appreciation of domestic currency as the result from speculative attack can not be achieved (Central Bank will only increase its reserves), that's why any speculative attack is aimed at depreciation of domestic currency. For the attack to be successful speculators must create substantial short term demand for foreign currency, which can not be satisfied by Central Bank at current fixed exchange rate because of the lack of foreign reserves...
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For the attack to be successful speculators must create substantial short term demand for foreign currency, which can not be satisfied by Central Bank at current fixed exchange rate because of the lack of foreign reserves. Speculative attacks are a very widespread phenomenon: they were in tens of countries in the world, including Russia on October 11, 1994...
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