Even if, through sheer coincidence bordering on miracle, the inflow and outflow of capital happened to balance at the exchange rate at which imports and exports are at equilibrium, it would not follow at all that the exchange rate would necessarily become adjusted to its trade equilibrium level and would settle down around it. For there are also the speculation and arbitrage factors to reckon with. This chapter is concerned with the former.
KeywordsExchange Rate Foreign Exchange Speculative Operation Foreign Exchange Market Exchange Movement
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