MBA (General)IV – Semester, International Business Unit 1
Definition of Global Scenario of Exchange Rate Arrangements
The firms engaged in international business must have an idea about the exchange rate arrangement prevailing in different countries as this will facilitate their financial decisions.
Global Scenario
of Exchange Rate Arrangements
The firms engaged in international business
must have an idea about
the exchange rate arrangement prevailing in different countries
as this will facilitate their financial decisions. In this context, it can be
said that over a couple of decades, the choice of the member countries has been found shifting from one from of exchange
rate arrangement to the
other, but, on the whole, the preference for the floating-rate regime is quite
evident. At present, as many as 50 of a total
of 185 countries are having
independent float, while
other 27 countries are having managed
floating system.
The other 11 countries have crawling peg, while 53 countries have the system of peg of different kinds. The EMU countries have target-zone arrangement where they will have a common currency, Euro by 2002. The other 20 countries of Africa and Caribbean region come under some kind of economic and monetary integration scheme in which they have a common currency. Lastly, seven countries do not have their own currency as a legal tender. We may refer to an IMF publication (IMF, 2001) that provides a broad list of such arrangements among 185 countries.
