MGCR 382 Lecture Notes - Lecture 12: Market Liquidity, Speculative Attack, Longrun
16 Jan 2018
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Lecture 12, 13 - october 17th, 19th 2016 (fundamentals of multinational finance textbook, chapter 8) 1 + in quote prices t +1. * the ability to forecast exchange rate values in the short term to long term is unlikely, and none of the fundamental theories have proven useful. Currency market intervention: the value of a country"s currency is important to the government"s economic and political objectives. & policies: many countries with floating rate currencies still privately and publicly profess what value their currency should hold , foreign currency intervention - active management, manipulation, or intervention in the market"s valuation of a country"s currency. Indirect intervention: alteration of economic or financial fundamentals that are thought to be drivers of. Disequilibrium: exchange rates in emerging markets: the previous schools of thoughts (ppp, bop, asset) may work for large and liquid capital and currency markets, but smaller and less liquid markets demonstrate behaviour that contradicts theory.
