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International economics class problem: There are (at least) three different approaches to predicting how exchange rates...

International economics class problem:
There are (at least) three different approaches to predicting how exchange rates will change. Select 2 and compare and contrast them.
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Answer #1

Two most commonly used approaches to predict exchange rates are :-

1)fundamental approach - This approach utilizes data such as GDP, rate of inflation, productivity, balance of trade, and rate of unemployment.

Suitable for long term investments.

2)technical approach - exchange rates are determined by investors sentiments. Predictions are made through charts and positioning surveys, moving-average trend-seeking trade rules, and Forex dealers’ customer-flow data are used as data in this approach.

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