Hai,
I wanted to know if the controlled floating currency system we are having in India is actually good for us or is it doing us harm . Is the fixed currency in China giving them some sort of an advantage? Any other country following the same and doing bad??What about the advantages and dis advantages of floating currency system?? :?:

Hi

The overall exchange rate mechanism depends upon various factors , internal and external at the same time. If internal situation is better i.e. low inflations, good growth, low NPA level in economy, etc floating excvhange rate provides good leverage as the currency remains stable however same become reverse if those factors are not favorable.

to get a detailed understanding of Exchange rate regime, you can go the following link

http://www.stern.nyu.edu/globalmacro/exchange_rates/exchange_rate_regime.html

and

http://sify.com/finance/forex/fullstory.php?id=12565816

hi,

if u have a fixed currency rate like China,u r not affected by international events.the inflation rate is same & is under strict Govt controls.due to d fixed currency rate,exports are benefitted as companies know how much they are going to earn.

but if u have a free flot currency rate like india,we get affected by all international events.our export earnings depend on the currency rate and so.

i hope this was of some use.
bye.
cipher.

Hi,

If India gets in2 a fixed rate currency regime, the first impact will b on international trade i.e. import & export. The next big thing will be that we might turn in2 a closed economy instead of our major income that comes from the IT exports & Travel and tourism sector. India has an image of a very fast developing economy in the current day scenario & it will surely get impacted by such foolsih issues.

Hope it helps some1 2 understand the implications of a closed economy sorry a fixed rate currency regime.

Bye...