pp-aa.BEBrMa,•ptR•qaA→ipqgBEs.•-•BE•Ga.erqr program BBaB••••A%.•KEsnapqqpq.qqa.pqqw.

peGa*•eB•cñBBF•
AAAA

pqeaooq.mqgqT-B.P:-.
H
MLEFHHH.fi#q
The rate at which two currencies
are
exchanged .
 CURRENCY
aBBB-BM.it?*a-ME.&Mo RAPPAREE:pÑI•ma

d) Decrease in the value

of Increase in the value of
domestic interns domestic in terms
currency currency
of foreign currency .

of foreign currency .

Example -

C) Example :
-

$1 rises
from 7010747 $1 falls from 741-0707
 Effect of Deprecation of Domestic
currency
I. Increase in Exports
Fall in
with the
the value ofamount
domestic
currency
means

same more
goods can

be purchased .

a. Decrease in Imports
Indians will have to domestic
pay
more
to currency
import foreign goods .
s
. Increase in National Income -

Exports will increase .

-

Imports will fall ,

due to deprivation
Net Exports =

Exports -

Imports
It will increase the income .
i
 Effects of Appreciation of Domestic
Currency
is .
Increase in Imports -

Rise the price

in
of domestic
currency
means

now
,
one
rupee can be
exchanged for
more $ .

a. Decrease in Exports -

Appreciation will decrease exports .

now
,
one

unit of $ will
buy less
goods .
3. Decrease in National Income -

Exports will
fall
Imports will increase

So
,
Net Exports will decrease .

It will reduce the National Income .

 Ñ☒$E$¥④¥¥④P*EE.MG#HE--*eH--MAiM18IE**MtTHE-

F.ee#iable
Fixed
Rate Managed
Exchange Rate
Exchange FloatinRate
system.

System system .
 B-m* ED E*era ☒ GEE RAFE

Exchange
the
rate of currency
is decided
by
govt .

The basic purpose of adopting this system was to

ensure
stability .

Under each country keeps its value

fined
this
system
in Internal Standard .

When the value

of currency fined
is in terms
of
gold it is known
Parity Value
'

other
•

as
currency
or .
,
 FFI E-* ABLE EXCHANGE RATE SYSTEM

Exchange
market forces
of
rate
currency
is decided
by
of
demand and supply .

The value fluctuates freely

of
to the demand
currency according
$ supply
in the market .

It is also known as
Floating Enticing
• Pu
Rate

Free Rate
Exchange
MANAGED FLOATING RATE SYSTEM .

Exchange of
rate
market forces of
currency
is decidedby
demand $ supply
and central bank influences the rate

through intervention .

Central Bank inter venues with the aim to keep

rate close to desired values
exchange .

It also known Dirty Floating

' '

is as .
 I-B.PE?sBqMEA8HAMq8AA8&
1. Transfer Function -

In transfer function there is a settlement

of currency which takes place between two
countries .

It credit instruments like

is performedthrough drafts
bills
of foreign exchange ,
bank .
a. Credit Function -

It provides credit for foreign trade .

Like Bills
of exchange with
maturity period
of three months .

Function
3.

Hedgi
When
n g porters and
-

eu
importers enter into
agreement
to sell
buy goodscalled on futures dates at current
price ,
it is
hedging .
 * PINED 800¥ #☒*EIGEN HE# CHIANG E
AHH# KEEF$9
is Spot Market .

It refers to the market in which receipts and

payments are made
immediately .

④ Forward Market -

The present rate will be used

for
exchange future
making payment at a date .
 A
D S

of
it

÷: E

•
É D

É s

0 Demand and supply

of Foreign Exchange .