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Basic theoretical approaches to exchange rate determination

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1. What are the three basic theoretical approaches to exchange rate determination?

2. Even though PPP is the most widely accepted exchange rate determination method it is poor at predicting exchange rates. Why?

3. Which of the three major theoretical approaches seem to put the most weight on the demand and supply of money? What is its primary weakness?

4. Explain how technical analysis may be used to forecast currencies

5. When is direct intervention likely to be useful? When is it likely to be [least successful?

6. What is overshooting?

7. The Ecuadorian sucre (SE) suffered from hyper-inflation in the 1990s, falling from S5,000 to the USD to S25,000. What was the percentage change value?

Reference no: EM132724529

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