Exchange rate policies in the less developed countries, pp.38-71

Exchange rates are the prices of domestic national currencies of sovereign governments in terms of foreign currencies. As they are the relationships among the domestic national currencies of sovereign stats and the foreign currencies, exchange rates are important instruments that connect domestic prices of goods and services with the world prices of goods and services or products. Indeed, such relationships have significant meaning in evaluating the level of the domestic prices in relation to the world prices. Exchange rates may be influential instruments of economic policies. Thus, all foreign economic relations of a country are related to the policy of the national currency. Such economic policies are:|Foreign trade|International investments|Activities connected with diplomatic missions|The balance of payments (BOPs), and especially the gross international reserves (GIRs), etc Exchange rate policies are a set of measures pursued by financial authorities of sovereign governments in order to regulate the relationship between their domestic national currencies and the foreign currencies so as to achieve other financial and/or economic goals.