Government Buying It’s Own Bonds?

Not that they can’t, but why would it be bad policy to raise government revenues by issuing bonds that are then sold to the monetary authority? Here are some thoughts in relation to a fixed exchange system and a floating exchange rate system. There is an...
Canadian dollar hits 11 year low with no end in sight

Canadian dollar hits 11 year low with no end in sight

The Loonie hit on 11 year low closing the day at 1.3785 / 1USD. Last time the dollar was this low was May 2004. Apart from immediate consumer impact felt in the purchase of consumer goods and vacations, the depreciating currency is indicative of deeper problems for...

How to Predict Foreign Exchange Movements

The reason domestic currencies drop may baffle some newbie FOREX investors since many movements are rooted in what are called ‘expectations’. You see, currency movements move up or down (depreciate or appreciate) based on expectations and/or real...

Current Account and Devaluation of Currency

Q. Why/How may a drastic fall in the current account lead to a devaluation of a currency under a fixed exchange rate system? A. A drastic fall in the CA may lead domestic policy makers to move for expansion of domestic output in an attempt to increase exports or have...
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