In five pages this paper discusses speculators' role, levels of imports and exports, disposable income, rates of inflation and interest, and political events as they influence rates of currency exchange. Four sources are listed in the bibliography.
Name of Research Paper File: TS14_TEcurrny.rtf
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of the currency against other currencies will be determined by the markets. There are several influences on this, which will all interact. The role of supply and demand is
the main factor. Where there is a greater demand for currency the value against other currencies will increase, where the demand falls there will be a decrease in the value.
There are many factors that will impact on the demand for the currency. Demand may be impacted o as a result of internal or external economic conditions, the political
situation or even interest rates. By using the dollar and sterling as an example this can be further examined. The political situation
will be one factor which will determine the exchange rate. Where a political system is seen as stable and long lasting there will be a greater stability to the currency
meaning the value is less likely to fluctuate, where there is weakness or uncertainty this is reflected in the economic outlook of the country. In turn this will then impact
on the supply and demand of the currency, decreasing the demand and reducing the strength of the currency. An example of this
may be seen as the recent events in the United States and the bombing of the World Trade Centre. This was seen as a catastrophic event, the country was
already in the verge of recession and the exchange rate was $1.44 to ?1. In the days and weeks following the events the markets suffered, not by great percentages in
terms of the currency, but the rate did change weakening to $1.49 to the ?1. In effect the price of sterling was more expensive due to a lower confidence in
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