Technical Note
EXCHANGE RATES (B)
INDUSTRY :-
AREA :BUSINESS GOVT/INTERNATIONAL ECONOMY
ORGANIZATION :-
LENGTH :14
LUMS No :16-287-88-2
PUBLICATION YEAR : 1988
ABSTRACT:
Foreign exchange markets are the markets where individuals, firms, and banks buy and sell currencies or foreign exchange. The supply and demand for foreign exchange determine the exchange rate. The level of the exchange rate, in turn, is a guide for the allocation of resources between tradeables (exportable and importable goods and service) and non-tradeables. A given exchange rate helps firms to decide what would be profitable to produce and whether it would be profitable to produce for the export market or only for selling domestically; similarly, households decide whether, at the given exchange rate, it would be cheaper to purchase an imported product or a domestically-produced item.