Exchange rate policy
Definition. Exchange rate policy is the use of the exchange rate as the main instrument of monetary policy, whereby the central bank manages the external value of the currency to achieve macroeconomic goals such as price stability. Singapore operates this policy through a managed float of the trade weighted nominal effective exchange rate.
The Monetary Authority of Singapore guides the currency within an undisclosed policy band, adjusting the slope, width, or centre to lean against imported inflation given the economy openness.
This term belongs to Exchange Rate Policy in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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