I/EFI/11. Foreign exchange market.

The major factor influencing to the rate of exchange, is interference of government in the person of central bank in currency policy of the country. The value of a nation's currency in the international markets has long been a source of concern to governments around the world. National pride plays a significant role in this case because a strong currency, avidly sought by traders and investors in the international marketplace, implies the existence of a vigorous and well-managed economy at home. A strong and stable currency encourages investment in the home country, stimulating its economic development. Moreover, changes in currency values affect a nation's balance-of-payments position. A weak and declining currency makes foreign imports more expenÓsive, lowering the standard of living at home. And a nation whose currency is not well regarded in the international marketplace will have difficulty selling its goods and services abroad, giving rise to unemployment at home. This explains why Russia , for example, made such strenÓuous efforts in the early 1990s to make the Russian ruble fully convertible into other globÓal currencies, hoping that ruble convertibility will attract large-scale foreign investment. The major factor influencing to the rate of exchange, is interference of government in the person of central bank in currency policy of the country. The value of a nation's currency in the international markets has long been a source of concern to governments around the world. National pride plays a significant role in this case because a strong currency, avidly sought by traders and investors in the international marketplace, implies the existence of a vigorous and well-managed economy at home. A strong and stable currency encourages investment in the home country, stimulating its economic development. Moreover, changes in currency values affect a nation's balance-of-payments position. A weak and declining currency makes foreign imports more expenÓsive, lowering the standard of living at home. And a nation whose currency is not well regarded in the international marketplace will have difficulty selling its goods and services abroad, giving rise to unemployment at home. This explains why Russia , for example, made such strenÓuous efforts in the early 1990s to make the Russian ruble fully convertible into other globÓal currencies, hoping that ruble convertibility will attract large-scale foreign investment.