Islamic Finance

Relation between Exchange Rate and Interest Rate (Synopsis) dominate of Science (Management Sciences) Submitted by Mobin Ahmed Roll # 004 Submitted to, Dr. Fakr ul Huda ------------------------------------------------- Hamdard Institute of Management Sciences copulation BETWEEN EXCHANGE RATE AND INTEREST RATE INTRODUCTION Interest range and foreign exchange place are the key macroeconomic variables of any economy. Interest govern is the price of borrowing coin or it potful also be defined as the cost of money. It has a very significant role in an economy. Any change in sake rate can cause problem for the investors. There are several types of delight rates available in an economy, including short term and ache term interest rates. Foreign exchange rate on the other hand is the rate at which one capital can be converted into another currency. Like interest rate, exchange rate is also a very primary(prenominal) variable for any economy. The countrys import and trade can suffer if the exchange rate changes abruptly. These two variables are beyond the control of any corporation, and businessmen always respect a steady change in these variable. Because a fast change in these variable can affect the lucrativeness and returns of the business.

That is the very reason; we often see the huge hesitation in stock market if any change is discovered in these variable. The role of exchange rate policy in economic development has been the subject of much debate and contention in the development literature. Interest rates and exchange rates are usually viewed as important in the transmission system of monetary impulses to the real economy. In the short run the well-worn view of academics and policy-makers is that a monetary expansion lowers the interest rate and rises the exchange rate, with these price changes then affecting the level and piece of music of aggregate demand. Frequently, these influences are described as the liquidity set up of monetary expansion,... If you want to get a full essay, point it on our website: Orderessay

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