What is an exchange rate in economics?

Running head: EXCHANGE RATE
Exchange Rate
Name of the Student:
Name of the University:
Author Note:
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EXCHANGE RATE
Table of Contents
1.Introduction:...............................................................................................................3
1.1Discussion:..............................................................................................................3
2Historical Analysis:..................................................................................................3
2.1Interest Rate:....................................................................................................3
2.2Inflation Rate:.......................................................................................................5
2.3Speculation:......................................................................................................6
3.Forecast Analysis:..................................................................................................8
3.1Interest Rate:....................................................................................................8
3.2Inflation Rate:...................................................................................................9
3.3Speculation:....................................................................................................11
1.2References:...........................................................................................................13

EXCHANGE RATE
1.Introduction:
The exchange rate between two countries depend on various factors which
affect its movement making it to depreciate or appreciate. Thus, this report aims to
provide an historical analysis and forecast analysis of the EUR/USD currency pair
using the various factors which are highlighted in the report. The report is divided in
two parts the first being the historical analysis and the second being the Forecast
analysis.
1.1Discussion:
2Historical Analysis:
2.1Interest Rate:
The interest rate in the Euro region is negative -0.5%, which has been kept by
the European central bank. Thus, this has led to the depreciation of Euro in terms of
Dollars, which is a sign of rise in exports from the Euro region to other countries.
This has been kept steady by the ECB to increase the exports in the Euro Region.
However, the EUR/USD currency pair highlights the Euro to depreciate while the
USD to appreciate in terms of Euro.

ER1
Quantity of
currency
Exchange
rate
ER1
Quantity of currency
Exchange rate
EXCHANGE RATE
Graph 1: Depreciation of Euro
Source: By the Author
Graph 2: Appreciation of USD
Source: By the Author