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... that the only policy option for a government to defend its currency is to ‘use up’ its foreign reserves until they are exhausted. However, I am not denying that model 1 is applicable in some situations; inconsistencies between the domestic policies of a country and its exchange regime are often so great that a crisis is inevitable and the operators will merely dictate its timing. The topic is highly complex and the causation of crises is hugely dependent on the unique interplay of economic and political factors that mould the potential crisis environment in each country.
Finance
/Capital Markets & Exchanges
/Currency Crises
Operators in foreign exchange markets don’t cause currency crises, they merely affect their timing. Explain and discuss.
Details
| language |  | english |
| wordcount |  | 2430 (cca 6.5 pages) |
| contextual quality |  | N/A |
| language level |  | N/A |
| price |  | free |
| sources |  | 4 |
Table of contents
Page 1 -Intro
Page 2-4 -Models
Page 5-7-Evidence
Preview of the essay: Currency Crises
In order to answer the question of whether or not pure speculation of operators can be the root cause of currency crises, both sides of the argument will be analysed by firstly looking at the two main currency crises models. Discussion will then continue by looking at relevant viewpoints and referring to recent currency crisis case studies in the real world. It will be concluded that operators in foreign exchange markets can and do cause currency crises but it will also be acknowledged that they are not always the trigger. The foreign exchange market is where investors ...... that the only policy option for a government to defend its currency is to ‘use up’ its foreign reserves until they are exhausted. However, I am not denying that model 1 is applicable in some situations; inconsistencies between the domestic policies of a country and its exchange regime are often so great that a crisis is inevitable and the operators will merely dictate its timing. The topic is highly complex and the causation of crises is hugely dependent on the unique interplay of economic and political factors that mould the potential crisis environment in each country.
Essay is in categories
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Finance
/Capital Markets & Exchanges
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Economics
/Economics
/Macroeconomics
/Comments
Princess R.Currency crises that took place in Asia is a result of depression in America. I guess currency crises will continue to happen in the next few years to come.