Reaction of foreign exchange market

Assignment Help Finance Basics

Reference no: EM1345874

On November 28, 1990, Federal Reserve Chairman Alan Greenspan told the House Banking Committee that despite possible benefits to the U.S. trade balance, "a weaker dollar also is a cause for concern." This statement departed from what appeared to be an attitude of benign neglect by U.S. monetary officials toward the dollar's depreciation. He also rejected the notion that the Fed should aggressively ease monetary policy, as some Treasury officials had been urging. At the same time, Mr. Greenspan didn't mention foreign exchange market intervention to support the dollar's value.

a. What was the likely reaction of the foreign exchange market to Mr. Greenspan's statements. Explain.

b. Can Mr. Greenspan support the value of the U.S. dollar without intervening in the foreign exchange market? If so, how?

Reference no: EM1345874

Questions Cloud

Foreign exchange rates and us interest rates : Assume the Federal Reserve Bank of US unexpectedly raises interest rates in US. How do you think this will impact foreign-exchange market?

Direct impact on ethical climate of organization : Leaders must understand their actions have a direct impact on the ethical climate of the organization please describe

Find the standard deviation of the return : The expected return on market is 12 percent and the risk free rate is 7 percent. The standard deviation of the return on the market is 15 percent. Ones investor creates a portfolio on the efficient frontier with an expected return of 10 percent.

What is the mass of the puck : A rubber ball is bouncing along the lever floor. after each bounce it only goes back up to half of the height that it just fell from. make a proportional sketch displaying this ball bouncing six times.

Reaction of foreign exchange market : What was the likely reaction of the foreign exchange market to Mr. Greenspan's statements. Explain. Can Mr. Greenspan support the value of the U.S. dollar without intervening in the foreign exchange market? If so, how?

Explain what would be an effective communication style : Effective Communication to Increase Employee Workload - Explain what would be an effective communication style

Currency board-central bank-nominal exchange rate target : Explain the chief differences between a currency board and a central bank with the nominal exchange rate target.

Evaluating the capital investment project : What types of decisions would need to be made before the investment is made? Indicate the main kinds of information required to estimate this capital investment project.

Explain how to analyze internet : Explain how to analyze Internet - Web communication - Identify the Web site, the message that it wants to communicate, the sender, and the perceived receiver.

User Account

All Pages