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Essay / Research Paper Abstract
This 8 page paper discusses the issue of whether or not the United Arab Emirates should float its currency. Bibliography lists 8 sources.
Page Count:
8 pages (~225 words per page)
File: D0_HVFloUAE.rtf
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Unformatted sample text from the term paper:
whether or not the United Arab Emirates should float its currency. Floating and Pegged Currency The "exchange rate regime is the way a country manages its currency in respect
to foreign currencies and the foreign exchange market" ("Exchange Rate Regime"). There are three basic ways of managing the currency: a floating exchange rate; a pegged float; or a
pegged exchange rate ("Exchange Rate Regime"). If the country chooses a floating exchange rate, "the market dictates the movements of the exchange rate"; if it chooses a pegged float,
the central bank "keeps the rate from deviating too far from a target ... value"; and if it uses a pegged rate, the countrys currency is tied to another currency,
usually the U.S. dollar or the Euro ("Exchange Rate Regime"). Most currencies today, including the dollar and the Euro, are floating currencies ("Exchange Rate Regime"). Well look at
floating currencies a bit more in a moment. Lets examine the pegged float and the pegged ("fixed") rate; then we can see what might work best for the UAE.
The pegged float "is pegged to some band or value, either fixed or periodically adjusted" ("Exchange Rate Regime"). There are two types of pegged floats, "crawling bands" and "crawling
pegs" ("Exchange Rate Regime"). If the currency is a crawling band, "the rate is allowed to fluctuate in a band around a central value, which is adjusted periodically. This
is done at a preannounced rate or in a controlled way following economic indicators" ("Exchange Rate Regime"). If its a crawling peg, the "rate itself is fixed, and adjusted
as above" ("Exchange Rate Regime"). A pegged (fixed) rate is directly convertible to another currency ("Exchange Rate Regime"). "In case of a separate currency ... the domestic currency is
...