Unit 4: Currency Markets

Some people might be covering the different exchange rate mechanisms at the moment and there are a few articles I have found particularly useful in lessons.

Hong Kong authorities have intervened a few times over recent weeks in order to maintain their HK$7.80 peg to the US dollar. This BBC article is very explicit and easy to understand analysis of a pegged currency and reasons why countries may move out of a peg. As is this video of Black Wednesday and the various interventions from the BoE to stabilise the pound.

Thanks to Mitt Romney's presidential campaign and no doubt the efforts of News Corp China's currency has once again come under the spotlight. This is a very nice article from The Economist outlining the appreciation of the Yuan over the last two years towards fair value, which is particularly relevant given the developed world's tacit depreciation of currency through various QE measures.

Some of the more interested of you may want to look at this VOX piece on QE, currency intervention and the appetite for bonds during these periods, particularly government bonds that are seen as close substitutes for each other.