Managed Exchange Rate Systems part 1

To avoid the volatility and uncertainty that often accompany a floating exchange rate, some governments and central banks choose to manage or peg their currency’s value against another currency. This lesson explains the tools by which an exchange rate can be managed and maintained within a range of values, using the Swiss National Bank’s decision to peg the Swiss franc against the euro in 2011 as an example.


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Managed Exchange Rate Systems part 2

To avoid the volatility and uncertainty that often accompany a floating exchange rate, some governments and central banks choose to manage or peg their currency’s value against another currency. This lesson explains the tools by which an exchange rate can be managed and maintained within a range of values, using the Swiss National Bank’s decision to peg the Swiss franc against the euro in 2011 as an example.

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Calculating Exchange Rates from Linear Equations

An exchange rate is simply an equilibrium price in a market for a currency, and like the prices of other goods, services and resources, a currency’s value can be calculated if the equations for supply and demand are known. This lesson will demonstrate how to calculate an equilibrium exchange rate from linear equations, and in part 2 demonstrate how an intervention by a central bank can lead to a change in demand or supply of a currency and thus trigger a change in its value.

Part 1:

Part 2:

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A Quiz on Exchange Rate Manipulation

These two videos demonstrate the solutions to two questions on a quiz I recently gave my year 2 IB Economics students on exchange rates. Before you watch the videos, consider attempting the quiz yourself. It can be downloaded here: Exchange Rates Quiz

The explanations are done in two videos. Here’s the explanation for Quiz question #1:

And here’s the explanation for #2:

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