The Significance of the Exchange Rates: A Survey of the Literature ()
ABSTRACT
Since the
collapse of the Bretton Woods in the late 1970’s, the international monetary
system has been dominated by the floating exchange rate
system. The currencies around the world are mainly determined by the laws of
the supply and demand. International trade has been the engine of growth and
the cause of stability in many countries. International
trade flows have increased extremely over the last three decades. The
reduction of trade and policy barriers have contributed in the rise of global
trade, but the interesting question is if the exchange rates play any role in
international economic relations. An important aspect of
the relationship between the exchange rates and the international economic
relations is the intensity of the effect. To examine the intensity of this relation, we must mention the connection among exchange
rates with the economy and trade. Due to the fact every country—developed or developing—targets
economic growth, the investigation of the relationship of the exchange rate
with the economy is important. Moreover, the exchange rate affects the trade
volume and the current account, so the exploration of the exchange rate with
the trade performance is necessary. The aim of this paper
is to survey the economic literature on the relationship between exchange
rates and global economic relations.
Share and Cite:
Karakostas, E. (2021) The Significance of the Exchange Rates: A Survey of the Literature.
Modern Economy,
12, 1628-1647. doi:
10.4236/me.2021.1211082.