Otherwise these policies destabilising capital flows would inevitably undermine the exchange rate. ... According to this view, an exchange rate anchor was particularly effective in countries with high inflation say, high two digits levels that had already tackled (most of) their fiscal imbalances. ... For example, an investor wishing to invest in a foreign country where such a deposit was in operation would find himself obliged to pay out an additional (say) 20%, which he would deposit with the central bank for a period of (say) one year. ... Recent regulatory changes have removed the protecti...

• Word Count: 2133
• Approx Pages: 9
• Has Bibliography
• Grade Level: Undergraduate

For example, the exiting party could enter into a second swap, this time receiving a fixed rate and paying a floating rate 2. .Selling the swap to a third party. ... Fixed Exchange Rate Policy According to the United States Agency of International Development (2011), "A fixed exchange rate regime might better be called, the fix the exchange rate (foreign currency price of the national currency) and, if necessary, devalue (lower the foreign currency price of the national currency) when it becomes too difficult to maintain the rate regime". ... For example a country's exports of a...

• Word Count: 1468
• Approx Pages: 6
• Has Bibliography
• Grade Level: Undergraduate