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4 Approaches to Forecasting Exchange Rates

December 17, 2017

PPP (or relative inflation rates) as exchange rate movements should offset inflation differentials.

Relative economic strength, because a strong pace of economic growth tends to attract investment.

Capital flows, as net inflows into a country, such as FDI, increase the demand for a country’s currency.

Savings-investment imbalances, through their ultimate effect on the need for foreign savings.


From → Economics

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