What determines the level of the exchange rate (a little theory)
Exports and imports
The higher prices and production costs within the country compared to overseas, the greater the increases imports compared to exports. Therefore, a high level of prices in the country and lower prices abroad usually means higher prices for foreign currency. This factor, which in the 20-ies of XX century was considered the most important is called "purchasing power parity" exchange rates. According to the concept of purchasing power parity, exchange rates change in the ratio of the two countries, other things being equal proportion to the ratio between domestic prices and prices abroad.
The stronger the desire for foreign goods and use foreign services, the greater the price has to offer for foreign currency. With the growth of national income, the demand for imported goods. This causes a tendency to reduce the cost of the national currency. On the other hand, a high national income abroad reduces the price of foreign currency. All this happens because of "the country's propensity to import: the growth of national income leads to increased imports of almost the same extent that the increased domestic consumption.
Movement of capital
If investors are seeking more foreign debt obligations, bonds, shares, bank deposits or cash, they thus bid up the price of foreign currency. In contrast, payments to other countries in a particular state helps enhance the rate of its currency.
This factor, which determines the movement of capital is closely related to currency speculation. If it were only the export of goods or payments on current account, the rate of foreign currencies, might have been dull and fluctuated only slightly. However, when the euro falls from 1.04 to 0.97 dollars per euro, many are beginning to fear that it will fall even more. So they try to get rid of the euro. Increased sales of the single European currency and reducing the demand for it as a result of short-term speculative capital flows has further reduced its rate.
Thus, small fluctuations in the exchange rate is often exacerbated by a spontaneous movement of "hot money" that moves from one country to another at any hearing of the impending problems, change of political direction or currency fluctuations. When such a "capital flight" begins in a large scale and in any one direction, it can lead to sharp movements in exchange rates and even the financial crisis.
What causes the movement of the exchange rate (a bit of practice)
Output data and the expectation of output data
On the concept of "data" may include the following events: output (publication) economic indicators of host-traded currencies, the reported changes in interest rates in these countries, reviews the state of the economy and other events that have significant influence on the foreign exchange market (for example, the end of the financial in Japan on March 31 presentation by the Minister of Finance to Parliament the draft state budget, etc.).
Waiting for an event and the onset of this event are strong drivers of exchange rates. It is difficult to say that has a stronger influence on the market, the event itself, or its expectation, but we can say with certainty that the way of serious data could result in significant and prolonged movements in exchange rates. These are important data: Nonfarm payrolls, GDP, Industrial production, CPI, PPI, and others.
Date and time of release of any particular indicator known in advance. There are so-called calendar of economic indicators and the most important events in the life of individual states (with specific dates, or approximate time of their release). These events market is ready. Emerging expectations and forecasts of the value of a particular indicator can go and how it can be interpreted.
Output data can cause large fluctuations in exchange rates. Depending on how market participants prointerpretiruyut one or another indicator, the course can go in one and the other side. This movement rate may lead to an increase of an existing trend, its correction or the beginning of a new trend. A particular outcome depends on several factors: market conditions, economic conditions of host countries examined rates, preliminary expectations and attitudes, and, finally, the significance of the indicator.
For example, after a series of increasing values of the indicators: GDP, Nonfarm payrolls, CPI, PPI in the market may appear talk of a possible increase in interest rates in the U.S.. Even if this change happens within a few months now actively beginning to buy U.S. dollars against other currencies. Thus begins up-trend for the dollar - a steady trend to strengthen the dollar against other currencies. After reports of changes in rates may begin the correction in this movement.
With the release of certain data (or any information affecting the market) are connected by the following proverb: "sell out well in the data" (sell good news), and "buy on rumor, sell on fact" (buy on rumor, sell on fact ). These sayings are suitable to situations where the market expects the onset of an event.
Even before the release of information about this event is a movement rate in a certain direction (towards the interpretation of future events), ie Market "found". So often after the release of data (if the information meets expectations) is moving in the opposite direction. This is due to the fact that expectations were open position and when there was something waiting for - is the closure of these positions. There is a so-called "profit taking" (removal of profit). Situations where such events occur, characterized by the expression "priced in" (ie, the event occurs is inherent in the price - which means a rate of one currency against another).
Activity Funds
The first place for their effect on long-term trends in the movement of exchange rates hold funds (hedge, investment, insurance, pension). One of the directions of their activities - is investing in certain currencies. With its enormous resources, they are able to make the course a long time to move in a certain direction. Management of funds of funds involved in fund managers (fund managers). They are true professionals.
Depending on the operating principles they can open the long-term, medium-and short-term positions. Fund managers make decisions based on serious analysis of financial markets. They are armed with various types of analysis: fundamental, technical, computer, psychological analysis of interrelated markets. Fund managers based on the processed information to try to foresee the consequences of certain events, in time to open a position in the right direction. Thus, one of the objectives of their activities is playing the lead.
Managers are trying to present a picture of the world currency market entirely (so to speak from the height of its flight) and when the picture is clear, there is a variety of tools for work and direction of trade. Of course, none of the types of analysis can not give an ideal result. However, using worked (and perfection) trading system, and having considerable funds, funds are able to start, strengthen and adjust the stronger the trend.
The activities of exporters and importers
Exporters and importers are users of the foreign exchange market (market users) in pure form. Exporters have a constant interest to sell foreign currency, while importers - buy it. With well-established firms engaged in export-import operations, there are analytical divisions that specialize in predicting the exchange rate to a more or less profitable to sell or buy foreign currency.
Significant influence of exporters and importers to market is observed in the Japanese market, the dollar against the yen. If the market is not a strong tendency, the exporters do not let a high rate up, and importers - deep down. Thus, they are able to hold course for some time in a certain range of levels (creating "range trading"). From time to time in the market analysis indicates the dollar against the yen levels to enter the market exporters (resistance level) and importers (support level).
For exporters and importers is also important to track trends and in terms of hedging currency risks. With the opening of a position opposite to the future operation is to minimize this type of risk (hedging currency risks).
The impact of exporters and importers to market is short term and not the cause of global trends, as the volume of foreign trade transactions are insignificant compared to the total volume of transactions in the foreign exchange market. Most of their activity creates a market retracement (correction), since at a certain level becomes profitable to sell or buy foreign currency.
Opinions politicians
Posts that can influence the movement of exchange rates that appear in various reports, summits, meetings, press conferences, etc. (Eg, meeting the leaders of the Group of Seven, or a press conference after the next discussion of interest rates).
The journalists of news agencies (Reuters, Bloomberg and others) closely followed the speeches and real-time insert the hottest statements in the news column of its agencies (the so-called "hot lines" or "hot news"). According to their effect on the market these statements can be compared with economic indicators.
The most common date and time of a speech known. These events market is ready, so shortly before the onset appear forecasts or rumors that can be said and how it can be interpreted. However, there are situations when it happens suddenly on the market. Then the market could start strong currency movements, which are not always predictable.
So, after the sensational reports of the resignation of Finance Minister Oskar Lafontaine of Germany (Oskar Lafontaine), the single European currency (euro) against the U.S. dollar has risen almost 400 points in just two hours.
If those or other statements carry a long-term consequences (for example, the possibility of changes in interest rates, the principles of formation of the state budget, etc.), then such movement may become a long-term trends.
For example, two times a year (winter and summer), all markets are closely watching the performances of the Federal Reserve Alan Greenspan in front of the two banking committees of Congress (Humphrey Hawkins testimony). During these presentations, market participants are trying to find in his words at least some hint of the future direction of interest rates in the United States. Depending on how market participants prointerpretiruyut Greenspan's words, you can install one or another trend on the U.S. dollar.
In relation to political figures, there is such a thing as a "charmed the course. This means that at certain points in time when the national currency rate reaches levels that are unfavorable for a particular state, they begin to say that, in their opinion, the course has already goes no further, that they will not allow further movement that intervention is possible, and so n. And because these people trusted (they already have the established authority and they have some authority), then their words are beginning to have a direct impact on the market.
This occurs most often after a strong and long-term trend in one direction. Therefore, after such statements traders can decide "not to tempt fate and start to" public gardens "(closing existing positions). This, in turn, leads to a correction of this trend.
When a course is truly at a critical level, the following statements may follow interventions by central banks. And this is a very strong impact on the market event - the course it may take more than one hundred points in the direction of intervention in a short time (sometimes minutes). In addition, the intervention may force market participants fear the open positions in the old direction. This, in turn, can lead to a landslide movements in exchange rates.
Below are the names of public figures who most frequently encountered in the headlines of news agencies and the opinion which is essential for the market.
U.S.: Federal Reserve Chairman Alan Greenspan (Federal Reserve Chairman Alan Greenspan), Finance Minister Lawrence Summers (Treasury Secretary Laurence Summers), president of the Federal Reserve Bank of New York William MakDana (Federal Reserve Bank of New York President William McDonough).
Germany: Finance Minister Hans Ayhel (Finance Minister Hans Eichel), Bundesbank President Ernst Velteke (Bundesbank President Ernst Welteke), former president of the Bundesbank, Hans Titmeyer (Bundesbank Ex-President Hans Tietmeyer), the Bundesbank's chief economist Hermann Remsperger (Bundesbank chief economist Hermann Remsperger ).
European Union: European Central Bank President Wim Duisenberg (ECB President Wim Duisenberg), a member of the Executive Council of the European Central Bank Tomasso Padoa-Schioppa (ECB Executive Board member Tomasso Padoa-Schioppa), the chief economist Otmar Issing (ECB Chief Economist Otmar Issing ), Dutch Finance Minister Gerrit Tsalm (Finance Minister Gerrit Zalm).
Japan: University Professor Keith, a former deputy finance minister, "Mr Yen" Eisuke Sakakibara (Keito University professor, Ex-Vice Finance Minister, "Mr Yen" Eisuke Sakakibara), Finance Minister Kiichi Miyazawa (Finance Minister Kiichi Miyazawa), head of the Agency for Economic Planning Taichi Sakaya (Economic Planning Agency Minister Taichi Sakaiya), governor of the Bank of Japan Masaru Hayami (Bank of Japan Governor Masaru Hayami), head of the International Department of the Ministry of Finance Sembach Mizoguchi (The head of the international bureau at Japan's Finance Ministry Zembei Mizoguchi).
United Kingdom: Finance Minister Gordon Brown (Chancellor of Exchequer Gordon Brown), governor of the Bank of England Eddie George (Bank of England Governor Eddie George), a member of the Monetary Policy Committee Bank of England Mervyn King (Bank of England Monetary Policy Committee member Mervyn King), a member of the Monetary Policy Committee Bank of England Willem Buiter (Bank of England Monetary Policy Committee member Willem Buiter), a member of the Monetary Policy Committee Bank of England's John Vickers (Bank of England Monetary Policy Committee member John Vickers).
Switzerland: Swiss National Bank Chairman Hans Meyer (Swiss National Bank Chairman Hans Meyer), chief economist at National Bank of Switzerland, Georg Heinrich (SNB Chief Economist Georg Rich), a member of the Governing Board of the National Bank of Switzerland Bruno Gehrig (SNB Governing Board member Bruno Gehrig).
France: Finance Minister Laurent Fabius (Finance Minister Laurent Fabius), Bank of France Governor Jean-Claude Trichet (Bank of France Governor Jean-Claude Trichet).
The activities of central banks
Its impact on the currency market the State exercises over central banks. If the central bank is absolutely certain state does not intervene in foreign exchange operations by buying and selling foreign currency on the foreign exchange market, the domestic currency is in a state of "free floating". In practice this happens very rarely. Countries with floating exchange rates, from time to time try to influence its exchange rate through monetary transactions. This state of currency called "dirty floating".
In order to promote production and consumption growth states must deal with regulation of the exchange rate. Commonly used direct and indirect regulation. Indirect regulation through the amount of money in circulation, inflation, etc. Direct include the discount policy and foreign exchange intervention in foreign exchange markets.
Foreign exchange intervention associated with sharp peaks or as abrupt withdrawal of significant amounts of currency with the international market. Output of the central bank's foreign exchange market is through commercial banks. Because the volumes are very large (billions of dollars), the foreign exchange interventions lead to significant movements in exchange rates.
For example, in 1998 the central bank of Japan (Bank of Japan) had several foreign exchange interventions that were designed to prevent further podeshevleniya the yen against the U.S. dollar. The market was thrown a few billion dollars, which led to a significant drop in the dollar against the yen.
The central banks of various countries can also implement and joint intervention in currency markets. During one of the interventions in the market the dollar against the yen in 1998, it involved the Fed (U.S. Federal Reserve).
If at a certain stage of economic development should devalue (depreciate) the national currency, the government increases the supply of its currency on the international market. This is often done at the expense of additional issue of currency.
Exports and imports
The higher prices and production costs within the country compared to overseas, the greater the increases imports compared to exports. Therefore, a high level of prices in the country and lower prices abroad usually means higher prices for foreign currency. This factor, which in the 20-ies of XX century was considered the most important is called "purchasing power parity" exchange rates. According to the concept of purchasing power parity, exchange rates change in the ratio of the two countries, other things being equal proportion to the ratio between domestic prices and prices abroad.
The stronger the desire for foreign goods and use foreign services, the greater the price has to offer for foreign currency. With the growth of national income, the demand for imported goods. This causes a tendency to reduce the cost of the national currency. On the other hand, a high national income abroad reduces the price of foreign currency. All this happens because of "the country's propensity to import: the growth of national income leads to increased imports of almost the same extent that the increased domestic consumption.
Movement of capital
If investors are seeking more foreign debt obligations, bonds, shares, bank deposits or cash, they thus bid up the price of foreign currency. In contrast, payments to other countries in a particular state helps enhance the rate of its currency.
This factor, which determines the movement of capital is closely related to currency speculation. If it were only the export of goods or payments on current account, the rate of foreign currencies, might have been dull and fluctuated only slightly. However, when the euro falls from 1.04 to 0.97 dollars per euro, many are beginning to fear that it will fall even more. So they try to get rid of the euro. Increased sales of the single European currency and reducing the demand for it as a result of short-term speculative capital flows has further reduced its rate.
Thus, small fluctuations in the exchange rate is often exacerbated by a spontaneous movement of "hot money" that moves from one country to another at any hearing of the impending problems, change of political direction or currency fluctuations. When such a "capital flight" begins in a large scale and in any one direction, it can lead to sharp movements in exchange rates and even the financial crisis.
What causes the movement of the exchange rate (a bit of practice)
Output data and the expectation of output data
On the concept of "data" may include the following events: output (publication) economic indicators of host-traded currencies, the reported changes in interest rates in these countries, reviews the state of the economy and other events that have significant influence on the foreign exchange market (for example, the end of the financial in Japan on March 31 presentation by the Minister of Finance to Parliament the draft state budget, etc.).
Waiting for an event and the onset of this event are strong drivers of exchange rates. It is difficult to say that has a stronger influence on the market, the event itself, or its expectation, but we can say with certainty that the way of serious data could result in significant and prolonged movements in exchange rates. These are important data: Nonfarm payrolls, GDP, Industrial production, CPI, PPI, and others.
Date and time of release of any particular indicator known in advance. There are so-called calendar of economic indicators and the most important events in the life of individual states (with specific dates, or approximate time of their release). These events market is ready. Emerging expectations and forecasts of the value of a particular indicator can go and how it can be interpreted.
Output data can cause large fluctuations in exchange rates. Depending on how market participants prointerpretiruyut one or another indicator, the course can go in one and the other side. This movement rate may lead to an increase of an existing trend, its correction or the beginning of a new trend. A particular outcome depends on several factors: market conditions, economic conditions of host countries examined rates, preliminary expectations and attitudes, and, finally, the significance of the indicator.
For example, after a series of increasing values of the indicators: GDP, Nonfarm payrolls, CPI, PPI in the market may appear talk of a possible increase in interest rates in the U.S.. Even if this change happens within a few months now actively beginning to buy U.S. dollars against other currencies. Thus begins up-trend for the dollar - a steady trend to strengthen the dollar against other currencies. After reports of changes in rates may begin the correction in this movement.
With the release of certain data (or any information affecting the market) are connected by the following proverb: "sell out well in the data" (sell good news), and "buy on rumor, sell on fact" (buy on rumor, sell on fact ). These sayings are suitable to situations where the market expects the onset of an event.
Even before the release of information about this event is a movement rate in a certain direction (towards the interpretation of future events), ie Market "found". So often after the release of data (if the information meets expectations) is moving in the opposite direction. This is due to the fact that expectations were open position and when there was something waiting for - is the closure of these positions. There is a so-called "profit taking" (removal of profit). Situations where such events occur, characterized by the expression "priced in" (ie, the event occurs is inherent in the price - which means a rate of one currency against another).
Activity Funds
The first place for their effect on long-term trends in the movement of exchange rates hold funds (hedge, investment, insurance, pension). One of the directions of their activities - is investing in certain currencies. With its enormous resources, they are able to make the course a long time to move in a certain direction. Management of funds of funds involved in fund managers (fund managers). They are true professionals.
Depending on the operating principles they can open the long-term, medium-and short-term positions. Fund managers make decisions based on serious analysis of financial markets. They are armed with various types of analysis: fundamental, technical, computer, psychological analysis of interrelated markets. Fund managers based on the processed information to try to foresee the consequences of certain events, in time to open a position in the right direction. Thus, one of the objectives of their activities is playing the lead.
Managers are trying to present a picture of the world currency market entirely (so to speak from the height of its flight) and when the picture is clear, there is a variety of tools for work and direction of trade. Of course, none of the types of analysis can not give an ideal result. However, using worked (and perfection) trading system, and having considerable funds, funds are able to start, strengthen and adjust the stronger the trend.
The activities of exporters and importers
Exporters and importers are users of the foreign exchange market (market users) in pure form. Exporters have a constant interest to sell foreign currency, while importers - buy it. With well-established firms engaged in export-import operations, there are analytical divisions that specialize in predicting the exchange rate to a more or less profitable to sell or buy foreign currency.
Significant influence of exporters and importers to market is observed in the Japanese market, the dollar against the yen. If the market is not a strong tendency, the exporters do not let a high rate up, and importers - deep down. Thus, they are able to hold course for some time in a certain range of levels (creating "range trading"). From time to time in the market analysis indicates the dollar against the yen levels to enter the market exporters (resistance level) and importers (support level).
For exporters and importers is also important to track trends and in terms of hedging currency risks. With the opening of a position opposite to the future operation is to minimize this type of risk (hedging currency risks).
The impact of exporters and importers to market is short term and not the cause of global trends, as the volume of foreign trade transactions are insignificant compared to the total volume of transactions in the foreign exchange market. Most of their activity creates a market retracement (correction), since at a certain level becomes profitable to sell or buy foreign currency.
Opinions politicians
Posts that can influence the movement of exchange rates that appear in various reports, summits, meetings, press conferences, etc. (Eg, meeting the leaders of the Group of Seven, or a press conference after the next discussion of interest rates).
The journalists of news agencies (Reuters, Bloomberg and others) closely followed the speeches and real-time insert the hottest statements in the news column of its agencies (the so-called "hot lines" or "hot news"). According to their effect on the market these statements can be compared with economic indicators.
The most common date and time of a speech known. These events market is ready, so shortly before the onset appear forecasts or rumors that can be said and how it can be interpreted. However, there are situations when it happens suddenly on the market. Then the market could start strong currency movements, which are not always predictable.
So, after the sensational reports of the resignation of Finance Minister Oskar Lafontaine of Germany (Oskar Lafontaine), the single European currency (euro) against the U.S. dollar has risen almost 400 points in just two hours.
If those or other statements carry a long-term consequences (for example, the possibility of changes in interest rates, the principles of formation of the state budget, etc.), then such movement may become a long-term trends.
For example, two times a year (winter and summer), all markets are closely watching the performances of the Federal Reserve Alan Greenspan in front of the two banking committees of Congress (Humphrey Hawkins testimony). During these presentations, market participants are trying to find in his words at least some hint of the future direction of interest rates in the United States. Depending on how market participants prointerpretiruyut Greenspan's words, you can install one or another trend on the U.S. dollar.
In relation to political figures, there is such a thing as a "charmed the course. This means that at certain points in time when the national currency rate reaches levels that are unfavorable for a particular state, they begin to say that, in their opinion, the course has already goes no further, that they will not allow further movement that intervention is possible, and so n. And because these people trusted (they already have the established authority and they have some authority), then their words are beginning to have a direct impact on the market.
This occurs most often after a strong and long-term trend in one direction. Therefore, after such statements traders can decide "not to tempt fate and start to" public gardens "(closing existing positions). This, in turn, leads to a correction of this trend.
When a course is truly at a critical level, the following statements may follow interventions by central banks. And this is a very strong impact on the market event - the course it may take more than one hundred points in the direction of intervention in a short time (sometimes minutes). In addition, the intervention may force market participants fear the open positions in the old direction. This, in turn, can lead to a landslide movements in exchange rates.
Below are the names of public figures who most frequently encountered in the headlines of news agencies and the opinion which is essential for the market.
U.S.: Federal Reserve Chairman Alan Greenspan (Federal Reserve Chairman Alan Greenspan), Finance Minister Lawrence Summers (Treasury Secretary Laurence Summers), president of the Federal Reserve Bank of New York William MakDana (Federal Reserve Bank of New York President William McDonough).
Germany: Finance Minister Hans Ayhel (Finance Minister Hans Eichel), Bundesbank President Ernst Velteke (Bundesbank President Ernst Welteke), former president of the Bundesbank, Hans Titmeyer (Bundesbank Ex-President Hans Tietmeyer), the Bundesbank's chief economist Hermann Remsperger (Bundesbank chief economist Hermann Remsperger ).
European Union: European Central Bank President Wim Duisenberg (ECB President Wim Duisenberg), a member of the Executive Council of the European Central Bank Tomasso Padoa-Schioppa (ECB Executive Board member Tomasso Padoa-Schioppa), the chief economist Otmar Issing (ECB Chief Economist Otmar Issing ), Dutch Finance Minister Gerrit Tsalm (Finance Minister Gerrit Zalm).
Japan: University Professor Keith, a former deputy finance minister, "Mr Yen" Eisuke Sakakibara (Keito University professor, Ex-Vice Finance Minister, "Mr Yen" Eisuke Sakakibara), Finance Minister Kiichi Miyazawa (Finance Minister Kiichi Miyazawa), head of the Agency for Economic Planning Taichi Sakaya (Economic Planning Agency Minister Taichi Sakaiya), governor of the Bank of Japan Masaru Hayami (Bank of Japan Governor Masaru Hayami), head of the International Department of the Ministry of Finance Sembach Mizoguchi (The head of the international bureau at Japan's Finance Ministry Zembei Mizoguchi).
United Kingdom: Finance Minister Gordon Brown (Chancellor of Exchequer Gordon Brown), governor of the Bank of England Eddie George (Bank of England Governor Eddie George), a member of the Monetary Policy Committee Bank of England Mervyn King (Bank of England Monetary Policy Committee member Mervyn King), a member of the Monetary Policy Committee Bank of England Willem Buiter (Bank of England Monetary Policy Committee member Willem Buiter), a member of the Monetary Policy Committee Bank of England's John Vickers (Bank of England Monetary Policy Committee member John Vickers).
Switzerland: Swiss National Bank Chairman Hans Meyer (Swiss National Bank Chairman Hans Meyer), chief economist at National Bank of Switzerland, Georg Heinrich (SNB Chief Economist Georg Rich), a member of the Governing Board of the National Bank of Switzerland Bruno Gehrig (SNB Governing Board member Bruno Gehrig).
France: Finance Minister Laurent Fabius (Finance Minister Laurent Fabius), Bank of France Governor Jean-Claude Trichet (Bank of France Governor Jean-Claude Trichet).
The activities of central banks
Its impact on the currency market the State exercises over central banks. If the central bank is absolutely certain state does not intervene in foreign exchange operations by buying and selling foreign currency on the foreign exchange market, the domestic currency is in a state of "free floating". In practice this happens very rarely. Countries with floating exchange rates, from time to time try to influence its exchange rate through monetary transactions. This state of currency called "dirty floating".
In order to promote production and consumption growth states must deal with regulation of the exchange rate. Commonly used direct and indirect regulation. Indirect regulation through the amount of money in circulation, inflation, etc. Direct include the discount policy and foreign exchange intervention in foreign exchange markets.
Foreign exchange intervention associated with sharp peaks or as abrupt withdrawal of significant amounts of currency with the international market. Output of the central bank's foreign exchange market is through commercial banks. Because the volumes are very large (billions of dollars), the foreign exchange interventions lead to significant movements in exchange rates.
For example, in 1998 the central bank of Japan (Bank of Japan) had several foreign exchange interventions that were designed to prevent further podeshevleniya the yen against the U.S. dollar. The market was thrown a few billion dollars, which led to a significant drop in the dollar against the yen.
The central banks of various countries can also implement and joint intervention in currency markets. During one of the interventions in the market the dollar against the yen in 1998, it involved the Fed (U.S. Federal Reserve).
If at a certain stage of economic development should devalue (depreciate) the national currency, the government increases the supply of its currency on the international market. This is often done at the expense of additional issue of currency.
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