Government Influence on Exchange Rate

1.1 Introduction:

Rate at which one currency may be converted into another. The exchange rate is used when simply converting one currency to another currency or for engaging in speculation or trading in the foreign exchange market. There are a wide variety of factors which influence the exchange rate, such as interest rates, inflation, and the state of politics and the economy in each country it also called rate of exchange or foreign exchange rate or currency exchange rate.

1.2 Objective of the Report:

The primary objective of this report is to know the over functions of government in foreign exchange market. But the objective behind this study is something broader. Objectives of the study are summarized in the following manner:

• To describe the exchange rate systems used by various government.

• To explain how government can use direct and indirect intervention influence exchange rates.

• To study existing government control over exchange rate system.

• To know how government can affect economic conditions.

• To have some theoretical exposures that will be helpful for our future career.

1.3 Methodology:

For preparing this report, we have undergone group discussion, collected data from internet. We also studied different circulars and reference books on this topic.

We hope these criteria will be enough to find out different picture of government influence on exchange rate system.

1.4 Limitations of the Study:

1. The time, 1(One) week, is insufficient to know all activities of government influence on exchange rate and prepare the report and presentation.

2. It was difficult to collect the information from group member for their job constraint.

3. Enough group discussion was not held due to time constraint.

4. Because of the limitation of information, some assumption was made. So there may be some personal mistake in the report.

2.1 Description & Analysis:

Exchange rate...