In: Economics
1.Refer to the relevant economic conditions in Zambia to support or refute the possibility of the J-curve effect in Zambia.
2.A Zambian importer who is due to make payment in three months in foreign currency seeks your advice on whether to hedge in the spot market or forward market. Offer them your advice on what each option entails and why you recommend a particular option.
3.Under the extended balance portfolio model of exchange rate determination, predict what will be the effect of Zambia’s exchange rate if the domestic interest rate was to fall relative to the foreign interest rate.