Exchange rates

Using the data in Extract A (Figure 1), calculate how the value of the Norwegian krone has changed compared to the Singapore dollar between 26 October 2021 and 29 May 2023.

Give your answer as a percentage and to one decimal place.

Explain how the data in Extract A (Figure 2) show that Singapore may have benefitted from managing its exchange rate compared to Germany and Norway.

Extract C (lines 1–2) states: ‘An economy that has seen considerable success by intervening in the foreign exchange market to manage its currency is Singapore.’

Using the data in the extracts and your knowledge of economics, assess the view that an economy is likely to perform better with a managed exchange rate rather than a freely floating exchange rate.

Table 4 shows the value of the pound sterling in euros and Canadian dollars at the beginning of 2021 and 2022.

According to the data in Table 4, between the beginning of 2021 and the beginning of 2022, the Canadian dollar

Assess the view that floating exchange rates are always better than fixed exchange rates.

Explain how a government or central bank can intervene to prevent the value of its currency rising.

Figure 8 shows two supply (S₁ and S₂) curves and the demand (D) curve for euros on the foreign exchange market and the price of euros in terms of pounds sterling.

Which one of the following is the most likely explanation for the change in the exchange rate shown in Figure 8 ?

An increase in eurozone

Explain why the value of a currency may fall in a floating exchange rate system.

A country experiences a large net capital outflow. All other things being equal, the most likely consequence of this in the short run will be a decrease in

Extract C (lines 8–9) states ‘Trade deficits and surpluses may be self-correcting in a floating exchange rate system.’

With the help of a diagram showing the supply of and demand for a currency, explain how a floating exchange rate may help to correct a trade surplus.