Exchange Rate Evaluation Report: Analysis of Currency Values

This report analyzes the exchange rates of the Malaysian Ringgit, British Pound, Chinese Yuan, and Swiss Franc, comparing their values against the U.S. Dollar. It explores the concepts of fixed and floating exchange rate systems, providing historical context for each currency's transition and current status. The report details the Malaysian Ringgit's shift from a pegged to a floating regime, the British Pound's evolution through the Bretton Woods system and the European Exchange Rate Mechanism, the Chinese Yuan's move towards a more market-determined exchange rate, and the Swiss Franc's detachment from its historical peg to the U.S. Dollar. References include sources such as OANDA and academic publications like Born, Juessen & Müller (2013), and He (2014).

Running head: EXCHANGE RATE EVALUATION
Exchange Rate Evaluation
Name of the Student
Name of the University
Author Note

1EXCHANGE RATE EVALUATION
Exchange rate is the number of units of one currency that is required to purchase one unit of
another currency.
The following are the exchange rates of three international currencies with respect to dollars:
1 U.S. Dollar = 4.13 Malaysian Ringgit
1 U.S. Dollar = 0.789 British Pound
1 U.S. Dollar = 6.847 Chinese Yuan
1 U.S. Dollar = 0.984 Swiss Franc
A fixed exchange rate is a system in which the central monetary authority of a country or the
country’s government fixes or pegs the value of that country’s currency against the value of
another country’s currency (Born, Juessen & Müller, 2013).
A floating exchange rate is a system in which the market forces of demand and supply
determine the exchange rate between two countries.
The Malaysian Ringgit follows a free-floating exchange rate regime. However, ringgit cannot
be traded outside of the country. In was in the year 1998 that the value of ringgit with respect
to dollars fluctuated between 3.80 and 4.40. At the time, Bank Negara Malaysia pegged
ringgit to US Dollars. However, currently, it is not pegged to any other currency ("Online
Trading & FX For Business | OANDA" 2019).
The British Pound sterling is currently a free-floating currency. In the year 1940, the pound
had been pegged to US Dollar and it had also been made part of the system of Bretton
Woods. However, it was in 1971 that pound was converted into a free-floating currency. In
the year 1990, the UK was included to be a part of the European Exchange rate mechanism.
However, the UK withdrew from in it in 1992 ("Online Trading & FX For Business |
OANDA" 2019).

2EXCHANGE RATE EVALUATION
Renminbi is the name of China’s official currency, while yuan is its primary unit. Till the
year 2005, renminbi was pegged to the U.S. dollar (He, 2014). China’s attempt to make a
transition from its centrally planned economic system to a more market determined economy
made its exchange rate to be made floating within a thin margin surrounding a fixed base
determined with regards a basket of international currencies.
Swiss Francs are issued by Switzerland’s National Bank. In the year 1945, when Switzerland
had become a part of the system of Bretton Woods, the official Swiss Franc had been pegged
to the US Dollar with 1 USD being equal to 4.37 Francs ("Online Trading & FX For Business
| OANDA" 2019). However, as of now, the Swiss Franc is not pegged to any other currency.

3EXCHANGE RATE EVALUATION
References
Born, B., Juessen, F., & Müller, G. J. (2013). Exchange rate regimes and fiscal
multipliers. Journal of Economic Dynamics and Control, 37(2), 446-465.
He, D. (2014). The internationalisation of the renminbi. The Oxford Companion to the
Economics of China, 109.
Online Trading & FX For Business | OANDA. 2019. Www1.Oanda.Com.
https://www1.oanda.com/.