Very Often Governments Seek to Alter the Market's Valuation of Their

question 17

Essay

Very often governments seek to alter the market's valuation of their currency by influencing relative interest rates, thus influencing the economic fundamentals of exchange rate determination rather than through direct intervention in the foreign exchange markets. Describe how this strategy works. Describe the case of the U.S. or China where the opposite effect, to the suggest here, have occurred.

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Definitions:

Creditor Beneficiary

is a third party that benefits from a contract wherein the promisor agrees to pay the promisee's debt to the third party.

Incidental Beneficiary

An incidental beneficiary is a third party who may benefit from a contract between two other parties, even though the benefits were not directly intended for them.

Privity of Contract

The legal principle that a contract confers rights and imposes obligations only on the parties to the contract, barring any third party from enforcing or interfering with the agreement.

Policy Proceeds

The amount paid out on an insurance policy, typically upon the occurrence of the event insured against.