Chapter 4

It’s All about Change: Changes in the Exchange Rate

In This Chapter

arrow Observing changes in selected exchange rates

arrow Observing the relationship between changes in exchange rates and macroeconomic ­fundamentals

arrow Developing a visual understanding of exchange rate regimes

If you like visualizing concepts, you’re in luck! This chapter is all about visualizing changes in exchange rates. Using example exchange rates, we look at how these rates fluctuate over time. Through these examples, you get a good look at the highly volatile nature of exchange rates.

Changes in exchange rates cause you to ask why these changes are happening. You can find the reasons behind why exchange rates change in Chapters 5, 6, and 7. In this chapter, graphs showcase the actual changes in selected exchange rates. In addition to exchange rates, the graphs include macroeconomic fundamentals, including GDP growth, inflation rates, and interest rates. The purpose of this chapter is to introduce a visual approach to the relationship between changes in exchange rates and macroeconomic fundamentals without providing a theory-based discussion.

In this chapter, I use the terminology introduced in Chapter 2, including ...

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