Political Economy of International Trade: IMF and Forex

This essay delves into the political economy of international trade, focusing on the intricate relationship between the foreign exchange market, the International Monetary Fund (IMF), and the international economic environment. It highlights the IMF's critical role in fostering monetary cooperation, facilitating international trade, and ensuring financial stability among its 189 member nations. The essay explains how the IMF works to stabilize foreign exchange systems and manage international payments, impacting the value of currencies and national monetary policies. Furthermore, the essay examines the IMF's influence on the international economic environment through its advisory role, surveillance of economic trends, technical assistance, and financial support to member nations. The study concludes that the IMF's operations, including surveillance, capacity development, and financial assistance, are essential for stabilizing foreign exchange and promoting global economic growth. The essay also references how the IMF supports policy reforms that encourage efficient resource utilization, thereby benefiting the international economic environment and stabilizing the global economy.

Running head: POLITICAL ECONOMY OF INTERNATIONAL TRADE
POLITICAL ECONOMY OF INTERNATIONAL TRADE
Name of the Student
Name of the University
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Table of Contents
Introduction......................................................................................................................................3
The Foreign Exchange, the IMF and the International Economic Environment.............................3
Conclusion.......................................................................................................................................4
References........................................................................................................................................5

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Introduction
The assignment highlights on the association between the foreign exchange, the
International Monetary Fund (IMF) and the international economic environment. The IMF and
the foreign exchange market are inextricably connected to each other in the global market. This
study also explains about IMF and the foreign exchange market impact international economic
environment.
The Foreign Exchange, the IMF and the International Economic Environment
The IMF is the organization of total 189 nations that work towards fostering monetary
corporation, facilitating international trade, securing financial stability, promoting higher
employment, reducing poverty and improving economic growth. The main objective of IMF is to
assure stability in foreign monetary system, which consists of foreign exchange rate system and
the international payment. This in turn enables the nations to tackle transaction between one
another. One of the related concepts to IMF is the foreign exchange market (FOREX) that aims
to oversee as well as manage trading of foreign exchange of some of the major currencies
(Hodrick, 2014) . Under the FOREX, the nation’s monetary policy becomes no longer dependent
on value of currencies of other nations but becomes dependent on both demand and supply of
currencies.
The IMF also affects the international economic environment as they advises several
member nations on financial as well as economic policies that decreases vulnerability to crisis,
motivates sustained growth as well as higher standard of living and promotes international
economic stability (The IMF and the Environment., 2018). Besides this, this institution also

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monitors international economic trends as well as developments that impact the performance of
international monetary as well as financial system. In addition to this, they also provide these
countries technical assistance in order to help them strengthen institutional capacity and also give
availability of resources to them. Furthermore, they helps in balanced growth as well as
expansion of international trade and also contribute to promotion of increased employment level
and real income of the nation (The IMF at a Glance., 2018). Apart from this, IMF also helps the
nations adopt sound policies through their vital functions of surveillance and lending. However,
the IMF has also supported the policy reforms including price, foreign exchange rate, taxes and
subsidies, which in turn tends to promote more utilization of resources and thus discouraged
waste. This in turn benefits the international economic environment and thereby stabilizes the
global economy.
IMF periodically reviews the economic policies of the member nations including their
system of exchange rate. The IMF operations also help these countries to counter volatility in
market. Moreover, they also criticize unrelenting intervention, which in turn prevents the foreign
exchange rate to adjust for reducing imbalances in trade as well as payments.
Conclusion
From the above study, it can be concluded that IMF plays huge role in the foreign
exchange market and international economic environment. The three main operations of IMF
are- surveillance, capacity development and financial assistance. These operations help to
stabilize foreign exchange and enhance the growth of global economy.

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References
Hodrick, R. (2014). The empirical evidence on the efficiency of forward and futures foreign
exchange markets (Vol. 24). Routledge.
Oatley, T. (2015). International political economy. Routledge.
The IMF and the Environment. (2018). Imf.org. Retrieved 24 March 2018, from
http://www.imf.org/external/pubs/ft/exrp/environ/
The IMF at a Glance. (2018). IMF. Retrieved 24 March 2018, from
http://www.imf.org/en/About/Factsheets/IMF-at-a-Glance