Q1: Sometimes national governments decide that they want their currencies to be more valuable than they currently are. Discuss some of the tools that a country might use if it wants to raise the value of its currency in foreign exchange markets and how they might use these tools.
Q2: What are the benefits to the Eurozone countries of having a common currency?
It takes several policies to increase a country’s value of currency. Such policies include Higher interest rates. This would attract ‘hot money flows. This Hot money flow involves a situation where a country gives money to other countries to take advantage of a better rate of return on saving. This seen especially between the developed countries financial trade with the developing countries. The use of common currency has been pivotal to the Eurozone countries. Such of the benefits realized includes improved economic stability and growth, more choice and stable prices for consumers and citizens, more integrated financial markets among others.