econ exchange rate

exchange rate

the value of one currency expressed in terms of another, ex: €1 = US$1.50

foreign exchange market

market for the trading of foreign currencies btwn gov’s, central banks, private commercial banks, multinational corporations (MNCs), and other financial institutions

central bank

the gov’s bank. institution responsible for an economy’s monetary policy

fixed exchange rate

exchange rate regime where the value of a currency is fixed/pegged to the value of another currency or to the avg value of a selection of currencies, or to the value of some other commodity like gold

revaluation

increase in the value of a currency in a fixed exchange rate system

devalutation

decrease in the value of a currency in a fixed exchange rate system

floating exchange rate

exchange rate regime where the value of currency is allowed to be determined solely by the demand + supply of the currency on the foreign exchange market

appreciation

increase in the value of one currency in terms of another currency in a floating exchange rate system

depreciation

decrease in the value of one currency in terms of another currency in a floating exchange rate system

managed exchange rates

exchange rate that floats in the foreign exchange markets but is subject to intervention from time to time by domestic monetary authorities to resist fluctuations they consider undesirable. AKA “dirty float”