exchange rate systems

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1、Chapter5Chapter5ExchangeRateSystemsCurrenciessuchastheeuro,theyen,andthedollartradefreelyintheworld’sforexmarkets,andtheirvaluesfluctuatefromminutetominute.TheHongKongMonetaryAuthority,ontheotherhand,haskepttheHongKongdollarbetweenHKD7.75=USD1andHKD7.85=USD1since1983.Betweentheseextremesoffreely

2、floatingexchangeratesandfullyfixedexchangeratesisawidevarietyofexchangeratesystems.Under-standinghowthesesystemsdifferiscriticallyimportantbecausethedifferencesaffectthecurrencyrisksinternationalbusinessesface.Thischapterexaminesthemanydifferentcurrencyarrangementsaroundtheworld.Animportantparto

3、fthisdiscussioninvolvesunderstandingthekeyrolecentralbanksandtheirinternationalreservesplayintheexchangeratesystems.ThischapteralsodescribeshowEuropeancountriescreatedtheEuropeanMonetaryUnionandcametoadopttheeuroasacommoncurrency.Thisdiscussionistopicalforthreereasons.First,countriescontinuetoad

4、opttheeuroastheircurrency;second,othergroupsofcountriesaroundtheworldmaysomedayfollowasimilarscheme;andthird,stresseswithintheeurozonehavecausedsomeEuropeanpoliticianstoadvocateabandonmentoftheeuroandreturntodomesticcurrencies.Understandingtheconstraintsthatadoptingtheeurohasplacedondifferentcou

5、ntriesclarifiesthedesirabilityofsuchasystem.5.1ALTERNATIVEEXCHANGERATEARRANGEMENTSANDCURRENCYRISKThissectionfirstsurveysthespectrumofexistingexchangeratearrangements.Thenwesum-marizehowdifferentsystemsimposedifferentcurrencyrisksoninternationalbusinesses.Finally,wereflectonpastandfuturetrendsine

6、xchangeratearrangements.ExchangeRateSystemsAroundtheWorldExhibit5.1surveysthecurrentarrangementsinplaceacrosstheworld,usinginformationfromtheInternationalMonetaryFund(IMF).AlthoughtheIMFdistinguishesmorecategories,theexchangeratesystemscanbesplitupintoroughlythreebroadcategories:currencieswithfl

7、oatingexchangerates,currenciesthathavefixedorpeggedexchangerates,andcurrenciesinwhichtheexchangerateiskeptinatargetzoneorallowedtofollowacrawlingpeg.133Exhibit5.1ExchangeRateSystemsAroundtheWorldNoSeparateLegalTenderUsestheU