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Monetary Devaluation - Paper

Monetary Devaluation

Like every other product the coin of a country has a price, which is the exchange type; this represents the quantity of Mexican pesos that are needed to buy an American dollar, and like every other price this one is determined because:
a) Because of the offer and demand of dollars, or
b) Because of the monetary authorities of the country.
The origin of the exchange types comes from the necessity that residents of one country have to buy another country's money in order to cover their international debts. In Mexico's case, residents demand dollars to buy goods and services from the exterior (imports); the offer of dollars comes from the selling of goods and services to the exterior ...

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Mexico the exchange type maintains fixed and the tendency of high prices is bigger than that one of the countries with whom we handle business normally, we will have a relative expensiveness of our goods and services with respect to the foreign ones. At the same time, foreign products will be cheaper to us. This situation provokes an increment in imports, carrying the demand of dollars, while the offer reduces as exports weaken. To stop this unbalance between offer and demand and not devaluating the coin, the government goes to external credit, establishes control over imports, subsides exports, etc… A situation of this type cannot maintain undefined. A way to correct this unbalance is to devaluate the coin (modification of the exchange type in the one the price of dollars in terms of our coin is increased).

MONETARY DEVALUATION

EXPERIENCE IN DEVALUATIONS:
While the devaluation in 1938 was associated with the petroleum expropriation, the one in 1948 was considered as ...

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Monetary Devaluation. (2007, June 5). Retrieved December 23, 2024, from http://www.essayworld.com/essays/Monetary-Devaluation/65958

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PAPER DETAILS

Added: 6/5/2007 08:34:02 AM
Category: Miscellaneous
Type: Premium Paper
Words: 715
Pages: 3

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