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Even though in the short term, currency values may deviate from the longer-term fundamental path. In...

Even though in the short term, currency values may deviate from the longer-term fundamental path. In the long term however, the exchange rates do appear to follow a fundamental equilibrium path, one that is consistent with the fundamental theories of exchange rate determination. There are three major schools of thought to explaining the economic determinants of exchange rates: parity conditions, the balance payments approach, and the asset market approach.

Discuss the strengths and issues of each.

Explain which is most relevant to explain the value of Ringgit Malaysia.

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Rahul Sunny answered 2 years ago
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