International Monetary System. How important is the exchange rate for currencies? Also, is the International Monetary Fund still necessary as a lender of last resort?
2006-06-25 04:58:31 · 2 answers · asked by CollegeBoy00 2 in Business & Finance ➔ Other - Business & Finance
The exchange rate is critical to a country's economic stability. Significant fluctuations can cause a panic and the country won't be able to pay its bills. For example, country Y owes country X one billion dollars. If the value of the dollar goes from 1 Euro to 2 Euros, country Y would still have to pay the billion dollars, but it would actually cost country Y two billion to make the payment. As for the IMF, if it's the lender of last resort, then duh -- yes it's important to the desperate country which may need the money to buy food for its people because it had a bad harvest due to weather, insects or war.
2006-06-25 07:22:22 · answer #1 · answered by CarolO 7 · 0⤊ 0⤋
exchange rates are very important. Funds are not necessary.
2006-06-25 12:04:19 · answer #2 · answered by dimpleguymatt 1 · 0⤊ 0⤋