Exchange Rate

Exchange Rate

Exchange Rate in International Trade

Meaning of Exchange Rate, according to the Dictionary of International Trade (Global Negotiator): The price of one currency expressed in terms of another, i.e., the number of units of one currency that may be exchanged for one unit of another currency. There are mainly two systems of exchange rates:

  • Free exchange rates: the actual exchange rate is determined by supply and demand on the foreign exchange market.
  • Fixed exchange rates: the exchange rate is tied to a reference (e.g., gold, USD, etc.).

Influences on exchange rates include differences between countries; investor expectations about the future changes in a currency’s value; investor views on the overall quantity of assets in circulation; arbitrage; and central bank exchange rate support. See floating exchange rate; Oanda.

Concept of Exchange Rate

An introductory definition of Exchange Rate is provided here: value at which one currency is traded for another

Exchange Rate Mechanism 2 (ERM2) and Europe

There is an entry on exchange rate mechanism 2 (erm2) in the European legal encyclopedia.

Exchange Rate Mechanism and the European Union

Resources

See Also

  • Finance
  • Consumer Credit
  • Negotiable Instrument
  • Securities
  • Financial Regulation
  • Corporate Finance
  • International Public Finance
  • ERM

multiple exchange rates
political economy, exchange rates, exchange rate policy, exchange rate regime, international monetary regime

Further Reading

  • Entry “Exchange Rate Mechanism 2 (ERM2)” in the work “A Concise Encyclopedia of the European Union from Aachen to Zollverein”, by Rodney Leach (Profile Books; London)
  • Abdelal, R. (2003) National Strategy and National Money Politics and the End of the Ruble Zone, 1991–1994. In J. Kirshner (ed.) Monetary Orders: Ambiguous Economics, Ubiquitous Politics. Ithaca, NY: Cornell University Press, pp. 98–124.
  • Aghevli, B., Moshin, K., and Montiel, P. (1991) Exchange Rate Policy in Developing Countries: Some Analytical Issues. IMF Occasional Paper No. 78. Washington, DC: International Monetary Fund.
  • Andrews, D. (ed.) (2006) International Monetary Power. Ithaca, NY: Cornell University Press.
  • Barro, R., and Gordon, D. (1983) Rules, Discretion, and Reputation in a Model of Monetary Policy. Journal of Monetary Economics 12 (1), 101–22.
  • Bearce, D. (2007) Monetary Divergence: Domestic Policy Autonomy in the Post-Bretton Woods Era. Ann Arbor: University of Michigan Press.
  • Bernhard, W., and Leblang, D. (1999) Democratic Institutions and Exchange Rate Commitments. International Organization 53 (1), 71–97.
  • Bernhard, W., Broz, J.L., and Clark, W.R. (2002) The Political Economy of Monetary Institutions. International Organization 56 (4), 693–723.
  • Blomberg, S.B., Frieden, J., and Stein, E. (2005) Sustaining Fixed Exchange Rates: The Political Economy of Currency Pegs in Latin America. Journal of Applied Economics 8 (2), 203–25.
  • Blyth, M. (2002) Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century. Cambridge: Cambridge University Press.
  • Blyth, M. (2003) The Political Power of Financial Ideas: Transparency, Risk, and Distribution in Global Finance. In J. Kirshner (ed.) Monetary Orders: Ambiguous Economics, Ubiquitous Politics. Ithaca, NY: Cornell University Press, pp. 239–59.
  • Cohen, B.J. (1998) The Geography of Money. Ithaca, NY: Cornell University Press.
  • Cohen, B.J. (2001) Beyond EMU: The Problem of Sustainability. In B. Eichengreen and J. Frieden (eds.) The Political Economy of European Monetary Unification, 2nd edn. Boulder, CO: Westview, pp. 179–204.
  • Conybeare, J. (1984) Public Goods, Prisoner’s Dilemmas and the International Political Economy. International Studies Quarterly 28 (1), 5–22.
  • Cooper, R. (1968) The Economics of Interdependence. New York: McGraw-Hill.
  • Dornbusch, R., and Edwards, S. (eds.) (1991) The Macroeconomics of Populism in Latin America. Chicago: University of Chicago Press.
  • Dreyer, J. (1978) Determinants of Exchange Rate Regimes for Currencies of Developing Countries: Some Preliminary Evidence. World Development 6 (4), 437–45.
  • Edison, H., and Melvin, M. (1990) The Determinants and Implications of the Choice of Exchange Rate System. In W. Haraf and T. Willett (eds.) Monetary Policy for a Volatile Global Economy. Washington, DC: American Enterprise Institute Press, pp. 1–44.
  • Edwards, S. (1994) The Political Economy of Inflation and Stabilization in Developing Countries. Economic Development and Cultural Change 42 (2), 235–66.
  • Edwards, S. (1996) Exchange Rates and the Political Economy of Macroeconomic Discipline. American Economic Review 86 (2), 159–63.
  • Eichengreen, B. (1989) Hegemonic Stability Theories of the International Monetary System. In R. Cooper (ed.) Can Nations Agree? Issues in International Economic Cooperation. Washington, DC: Brookings Institution, pp. 255–98.
  • Frankel, J. (1999) No Single Currency Regime is Right for All Countries or at All Times. Princeton Essays in International Finance, No. 215. Princeton: International Finance Section, Department of Economics, Princeton University.
  • Frieden, J. (1991) Invested Interests: The Politics of National Economic Policies in a World of Global Finance. International Organization 45 (4), 425–51.
  • Frieden, J. (1993) The Dynamics of International Monetary Systems: International and Domestic Factors in the Rise, Reign and Demise of the Classical Gold Standard. In R. Jervis and J. Snyder (eds.) Coping with Complexity in the International System. Boulder, CO: Westview, pp. 137–62.
  • Frieden, J. (1997) Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation. Journal of Economic History 57 (2), 367–95.
  • Frieden, J. (2002) Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration. International Organization 56 (4), 831–60.
  • Frieden, J., Ghezzi, P., and Stein, E. (2001) Politics and Exchange Rates: A Cross-Country Approach. In J. Frieden and E. Stein (eds.) The Currency Game: Exchange Rate Politics in Latin America. Washington, DC: Inter-American Development Bank, pp. 21–63.
  • Garrett, G. (2001) The Politics of Maastricht. In B. Eichengreen and J. Frieden (eds.) The Political Economy of European Monetary Unification, 2nd edn. Boulder, CO: Westview, pp. 111–30.
  • Gilpin, R. (1987) The Political Economy of International Relations. Princeton: Princeton University Press.
  • Goldberg, P., and Knetter, M. (1997) Goods Prices and Exchange Rates: What Have We Learned? Journal of Economic Literature 35 (3), 1243–72.
  • Gowa, J. (1983) Closing the Gold Window: Domestic Politics and the End of Bretton Woods. Ithaca, NY: Cornell University Press.
  • Gowa, J. (1988) Public Goods and Political Institutions: Trade and Monetary Processes in the United States. International Organization 42 (1), 15–32.
  • Gowa, J. (1989) Rational Hegemons, Excludable Goods and Small Groups: An Epitaph for Hegemonic Stability Theory? World Politics 41 (3), 307–24.
  • Grabel, I. (2003) Ideology, Power, and the Rise of Independent Monetary Institutions in Emerging Economies. In J. Kirshner (ed.) Monetary Orders: Ambiguous Economics, Ubiquitous Politics. Ithaca, NY: Cornell University Press, pp. 25–54.
  • Hall, M. (2005) Exchange Rate Crises in Developing Countries: The Political Role of the Banking Sector. Aldershot: Ashgate.
  • Hefeker, C. (1996) The Political Choice and Collapse of Fixed Exchange Rates. Journal of Institutional and Theoretical Economics 152 (2), 360–79.
  • Helleiner, E. (1994) States and the Reemergence of Global Finance. Ithaca, NY: Cornell University Press.
  • Helleiner, E. (2003a) The Southern Side of Embedded Liberalism: The Politics of Postwar Monetary Policy in the Third World. In J. Kirshner (ed.) Monetary Orders: Ambiguous Economics, Ubiquitous Politics. Ithaca, NY: Cornell University Press, pp. 55–77.
  • Helleiner, E. (2003b) The Making of National Money: Territorial Currencies in Historical Perspective. Ithaca, NY: Cornell University Press.
  • Heller, R. (1978) Determinants of Exchange Rate Practices. Journal of Money, Credit, and Banking 10 (3), 308–21.
  • Henning, C.R. (1994) Currencies and Politics in the United States, Germany, and Japan. Washington, DC: Institute for International Economics.
  • Kaelberer, M. (2004) The Euro and European Identity: Symbols, Power and the Politics of European Monetary Union. Review of International Studies 30, 161–78.
  • Kaelberer, M. (2005) Deutschmark Nationalism and Europeanized Identity: Exploring Identity Aspects of Germany’s Adoption of the Euro. German Politics 14 (3), 283–96.
  • Kaelberer, M. (2007) Trust in the Euro: Exploring the Governance of a Supranational Currency. European Societies 9 (4), 623–42.
  • Kaplan, S. (2006) The Political Obstacles to Greater Exchange Rate Flexibility in China. World Development 34 (7), 1182–200.
  • Kindleberger, C. (1973) The World in Depression, 1929–1939. Berkeley: University of California Press.
  • Kindleberger, C. (1981) Dominance and Leadership in the International Economy: Exploitation, Public Goods, and Free Rides. International Studies Quarterly 25 (2), 242–54.
  • Kirshner, J. (1995) Currency and Coercion: The Political Economy of International Monetary Power. Princeton: Princeton University Press.
  • Krasner, S. (1983) International Regimes. Ithaca, NY: Cornell University Press.
  • Krasner, S. (1991) Global Communications and National Power: Life on the Pareto-Frontier. World Politics 43 (3), 336–66.
  • Kydland, F., and Prescott, E. (1977) Rules Rather than Discretion: The Inconsistency of Optimal Plans. Journal of Political Economy 85 (3), 473–92.
  • Lake, D. (1993) Leadership, Hegemony, and the International Economy: Naked Emperor or Tattered Monarch with Potential? International Studies Quarterly 37 (4), 459–89.
  • Leblang, D. (1999) Democratic Political Institutions and Exchange Rate Commitments in the Developing World. International Studies Quarterly 43 (4), 599–620.
  • Leblang, D. (2003) To Defend or to Devalue: The Political Economy of Exchange Rate Policy. International Studies Quarterly 47 (4), 533–59.
  • Levy Yeyati, E., and Sturzenegger, F. (2005) Classifying Exchange Rate Regimes: Deeds vs. Words. European Economic Review 49 (6), 1603–35.
  • Martin, L. (2001) International and Domestic Institutions in the EMU Process and Beyond. In B. Eichengreen and J. Frieden (eds.) The Political Economy of European Monetary Unification, 2nd edn. Boulder, CO: Westview, pp. 131–55.
  • McNamara, K. (1998) The Currency of Ideas: Monetary Politics in the European Union. Ithaca, NY: Cornell University Press.
  • Mundell, R. (1961) A Theory of Optimal Currency Areas. American Economic Review 51 (3), 657–65.
  • Mundell, R. (1968) International Economics. New York: Macmillan.
  • Oatley, T. (1997) Monetary Politics: Exchange Rate Cooperation in the European Union. Ann Arbor: University of Michigan Press.
  • Odell, J. (1982) U.S. International Monetary Policy: Markets, Power and Ideas as Sources of Change. Princeton: Princeton University Press.
  • Oye, K. (ed.) (1986a) Cooperation under Anarchy. Princeton: Princeton University Press.
  • Oye, K. (1986b) The Sterling–Dollar–Franc Triangle: Monetary Diplomacy 1929–1937. In K. Oye (ed.) Cooperation under Anarchy. Princeton: Princeton University Press, pp. 173–99.
  • Reinhart, C., and Rogoff, K. (2004) The Modern History of Exchange Rate Arrangements: A Reinterpretation. Quarterly Journal of Economics 119 (1), 1–48.
  • Rizzo, J. (1998) The Economic Determinants of the Choice of an Exchange Rate Regime: A Probit Analysis. Economics Letters 59 (3), 283–7.
  • Shambaugh, G. (2004) The Power of Money: Global Capital and Policy Choices in Developing Countries. American Journal of Political Science 48 (2), 281–95.
  • Simmons, B. (1994) Who Adjusts? Domestic Sources of Foreign Economic Policy during the Interwar Years. Princeton: Princeton University Press.
  • Simmons, B., and Hainmueller, J. (2005) Can Domestic Institutions Explain Exchange Rate Regime Choice? The Political Economy of Monetary Institutions Reconsidered. Paper presented at the annual meeting of the Midwest Political Science Association, Palmer House Hilton, Chicago, Illinois Online.
  • Stasavage, D. (2003) When do States Abandon Monetary Discretion? Lessons from the Evolution of the CFA Franc Zone. In J. Kirshner (ed.) Monetary Orders: Ambiguous Economics, Ubiquitous Politics. Ithaca, NY: Cornell University Press, pp. 78–97.
  • Strange, S. (1971) Sterling and British Policy. London: Oxford University Press.
  • Tavlas, G. (1993) The Theory of Optimum Currency Areas Revisited. Finance and Development 30, 32–5.
  • Walter, S. (2008) A New Approach for Determining Exchange Rate Level Preferences. International Organization 62 (3), 405–38.
  • Wang, H. (2003) China’s Exchange Rate Policy in the Aftermath of the Asian Financial Crisis. In J. Kirshner (ed.) Monetary Orders: Ambiguous Economics, Ubiquitous Politics. Ithaca, NY: Cornell University Press, pp. 153–71.
  • Young, O. (1982) Regime Dynamics: The Rise and Fall of International Regimes. International Organization 36 (2), 277–97.

Hierarchical Display of Exchange rate

Finance > Monetary economics > Exchange policy
Agriculture, Forestry And Fisheries > Agricultural policy > Common agricultural policy > Agri-monetary policy > Monetary compensatory amount
Agriculture, Forestry And Fisheries > Agricultural policy > Common agricultural policy > Agri-monetary policy > Representative rate
Finance > Monetary relations > International finance > International monetary system
Finance > Monetary relations > Balance of payments > Trade balance
Finance > Monetary relations > European Monetary System > EMS exchange-rate mechanism > Central rate

Exchange rate

Concept of Exchange rate

See the dictionary definition of Exchange rate.

Characteristics of Exchange rate

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Resources

Translation of Exchange rate

Thesaurus of Exchange rate

Finance > Monetary economics > Exchange policy > Exchange rate
Agriculture, Forestry And Fisheries > Agricultural policy > Common agricultural policy > Agri-monetary policy > Monetary compensatory amount > Exchange rate
Agriculture, Forestry And Fisheries > Agricultural policy > Common agricultural policy > Agri-monetary policy > Representative rate > Exchange rate
Finance > Monetary relations > International finance > International monetary system > Exchange rate
Finance > Monetary relations > Balance of payments > Trade balance > Exchange rate
Finance > Monetary relations > European Monetary System > EMS exchange-rate mechanism > Central rate > Exchange rate

See also

  • Dual exchange rate