Economics Essay Example | Topics and Well Written Essays - 1500 words - 4

Economics - Essay ExampleIndeed, the currency stand in footstep policy must be geared towards leveling the global pecuniary playing field. The prior Bretton Woods agreement and the current United Kingdom governments policy determined the nations currency exchange rate. The variance in the United Kingdom currency in relation to another(prenominal) countrys foreign currency may translates to either a currency fluctuation gain or a loss. Romain Veyrune (2007) reiterated the fixed exchange rate system is defined as a pegged exchange rate. The exchange rate of the nations currency is matched to another nations currency. Likewise, the nations currency may also be matched with a precious metallic element like Gold. The main purpose of the unique monetary rating system is to make the nations currency stable, the British pound, in relation to another countrys pegged currency or precious metal. One of the major purposes of the fixed exchange rate system is to stabilise trading between the cardinal nations. Many companies can make predicting the current and future sales, purchases, and other currency related transaction between country with the currency that is pegged against the other nations currency and the country whose currency is used as the basis for the nations currency. ... The electronic currency, e-gold, found in the internet website, www.e-gold.com, is an internationally accepted currency that is pegged or fixed on the value of gold at the time of each sale or purchase of goods or services. Here, the persons pass of 20 e-gold currency is pegged the average world market price of gold. As the gold value increases, the value of the 20 e gold currency derive increases as the gold value declines, the value of the 20 e gold currency amount decreases. Thus, the value of one e-gold may increase or decrease depending one world value of gold or the demand value of another nations currency. Fernando Goncalves (2008) opined the floating exchange rate system is gro unded on the economic supply and demand of the nations currency in relation to the currency of another nation. Under this system, the currency exchange rate varies depending on the economic situation at the time of the exchange. Under the demand economic principle, the increase in the demand for one currency increases the value of such currency. On the other hand, Callum Henderson (2006) reiterated a decline in the demand for a certain currency generated a decline in the value of such currency. In laypersons terms, a Chinese having a strong need to use the American dollar to purchase American may be willing to corrupt or exchange RMB 10 for each American dollar. On the other hand, the American having a strong need to buy or get the Chinese currency, Yuan, can be willing to exchange one American dollar for only RMB 7 for each American dollar. The British pound is based on the fluctuating or supply and demand economic pricing policy in