Managing in a global economy by john marthinsen babson MBA chapter 13

CHAPTER 13 Exchange Rates: Why Do They Change? Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-1 The Real Exchange Rate Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-2 Real Exchange Rate Is an Index Number Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-3 Real versus Nominal Exchange Rates Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-4 Percentage Change in the Real Exchange Rate Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-5 Percentage Changes: Nominal Exchange Rates, Inflation Rates, and Real Exchange Rates Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-6 Review of Exchange Rate Measures Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-7 Nominal Effective and Real Effective Exchange Rates for the U.S Dollar Relative to a Broad Index of Major U.S Trading Partners Source: Federal Reserve Board, Foreign Exchange Rates, http://www.federalreserve.gov/releases/h10/ Summary (accessed September 25, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-8 Nominal Effective and Real Effective Exchange Rates for the U.S Dollar Relative to an Index of Major Foreign Currencies Source: Federal Reserve Board Foreign Exchange Rates, http://www.federalreserve.gov/releases/h10/ Summary (accessed September 25, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-9 Supply and Demand: What Goes on the Horizontal Axis? Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-17 Major Factors That Affect Nominal Exchange Rates Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-18 Effects of an Increase in Mexico’s Relative Price Level Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-19 Effects of an Increase in Mexico’s Relative Real GDP Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-20 Effects of Falling Mexican Interest Rates Relative to the United States Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-21 Effects of an Increase in Mexico’s Relative Risks or Taxes, or Effects of Relatively Unfavorable Mexican Investment Return Expectations Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-22 Spot Market Speculation Effects of an Expected Appreciation of the Peso Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-23 Forward Market Speculation Effects of an Expected Increase in the Peso’s Value Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-24 Effects of Bank of Mexico Intervention to Raise the Peso’s Value Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-25 The Effects of Bank of Mexico Foreign Exchange Market Intervention to Raise the Value of the Peso Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-26 Summary of Effects of Central Bank Intervention Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-27 Alternative Exchange Rate Systems Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-28 Stabilizing Central Bank Intervention Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13-29 De Facto Exchange Rate Regimes* Source: International Monetary Fund, Classification of Exchange Rate Arrangements and Monetary Policy Frameworks, De Facto Exchange Rate Arrangements and Anchors of Monetary Policy as of December 31, 2005, http://www.imf.org/external/np/mfd/er/2005/eng/1205.htm#table (accessed September 26, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Economic Information for Switzerland, 2001–2005 Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A13-1 Downward-Sloping Supply of Swiss Francs Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved ... Percentage Change in the Real Exchange Rate Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 13- 5 Percentage Changes: Nominal Exchange Rates, Inflation Rates, and... South-Western, a part of Cengage Learning All rights reserved Exhibit 13- 29 De Facto Exchange Rate Regimes* Source: International Monetary Fund, Classification of Exchange Rate Arrangements and Monetary... Cengage Learning All rights reserved Exhibit 13- 7 Nominal Effective and Real Effective Exchange Rates for the U.S Dollar Relative to a Broad Index of Major U.S Trading Partners Source: Federal Reserve