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Exchange Rates and Their Affect on Trade I INTRODUCTION Objective The general objectives of this study are to describe recent trade problems and examine why these problems are related to and affected by exchange rates The study first examines the exchange rate and how it is determined The study will explore in detail the agencies that determine these rates This study will also present the pros and cons of different prices of goods and services in different countries Specifically this paper 1 defines recent trade problems and how they are affected by the exchange rate 2 describes the steps taken within the agencies that determine the exchange rates 3 examines the impact of these rates both good and bad 4 analyzes the costs of similar goods in the US and in foreign markets 5 discusses the pros and cons of the exchange rate and how it affects trade 6 examines various exchange rate systems floating fixed and dirty floating Limitations of the Study The topics of exchange rate and trade both have a variety of factors that cause changes As with any study that attempts to explore current developments in the economy it is hard to keep information current It is also virtually impossible to report on the status of every single government that is involved in the exchange market One of the limitations of this study is to report on up-to-date values of currency while choosing a sample of governments that accurately represent the world economy Therefore the solution was to use stastical figures from magazine articles and books that were written within the previous year Also the countries that were chosen to be studied are considered to play a significant role in the exchange rate market Plan of the Paper This study first examines the relationship between the exchange rate and trade This examination includes a definition of the exchange rate an explanation of
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