Here the free trade theory argues that free
floating currency will increase the competitiveness of Portuguese wine; but the last winemaker is already dead!
But, in a dollar denominated global trade environment, the ability of a
floating currency regime to support full employment is severely limited.'
A
floating currency will force firms and investors to hedge against fluctuations.
The UAE stands to gain from a
floating currency and a monetary policy tailor-made to its economic needs, regardless of when.
As the renminbi increasingly becomes a two-way
floating currency, market expectations are adapting accordingly, and one-way directional bets against it seem far riskier than before.
'Since the Asian Financial Crisis (in 1997) the ringgit has evolved into a fully flexible or
floating currency. This is advantageous as it allows the ringgit to play its role as a shock absorber during times of stress,' he said, adding that businesses should be ready to manage their currency exposures prudently as exchange rate adjustments are unavoidable.
With not much fuss being raised by the interim government or the SBP (State Bank of Pakistan), one can only suppose they are reconciled to the fact that nothing much can be done as the PRs finds its balance in a free
floating currency market (driven by market forces).
Treasury Secretary Mnuchin saying that the dollar is "not a concern of mine," though he conceded that he believes in a strong dollar based on long-term fundamentals while affirming that he supports free
floating currency markets.
These large and persistent trade imbalances have developed because the
floating currency arrangement is inherently unstable.
The report added that "the risks to investors posed by a
floating currency, in which currency value is largely determined by the market, comes from the potential for investors playing the market to lose their capital, should the currency swing dramatically.
As part of Egypt's reform programme, the CBE decided to move the EGP to a completely
floating currency in November, which is now trading at its genuine exchange rate, noted the IMF.
Egypt's "migration to a managed
floating currency regime in the coming weeks is now more feasible," he said.
