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Markets - Foreign exchange market
Introduction
The UK foreign exchange reserves are managed by the central bank - the Bank of England, on behalf of the government. They have at various times intervened in the foreign exchange market to try to influence the level of the exchange rate. This is still an option, though has rarely been done in recent years. The resources in this section look at how the foreign exchange market works, and the possible ways it could be influenced.
- Explanation - a good starting point for finding out about the foreign exchange market. A simple overall guide.
- Theories - more detail on all the theories about exchange rates. The determination of exchange rates, fixed and floating exchange rates, the effects of exchange rate changes and the way in which intervention works.
- Worksheets - some worksheets to help you test your understanding of the foreign exchange market.
- Further work - some suggestions for other areas of economic theory you may want to look at when assessing foreign exchange markets.
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