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Best Theories Of Foreign Exchange

By Expert Author: smith maria

The foreign exchange market is the market in which foreign currency—e.g., the yen or euro or pound—is traded for domestic currency—e.g., the U.S. dollar. It is not in a centralized location and, instead, is a decentralized network that is, nevertheless, highly integrated via modern information and telecommunications technology.
The exchange rate is the price of foreign currency. For example, the exchange rate between the British pound and the U.S. dollar is usually stated in dollars per pound sterling ($/₤); an increase in this exchange rate from, say, $1.80 to say, $1.83, is a depreciation of the dollar. The exchange rate between the Japanese yen and the U.S. dollar is usually stated in yen per dollar (¥/$); an increase in this exchange rate from, say, ¥108 to ¥110 is an appreciation of the dollar. Some countries float their exchange rate, which means that the central bank (the country's monetary authority) does not buy or sell foreign exchange, and the price is instead determined in the private marketplace. Like other market prices, the exchange rate is determined by supply and demand in this case, supply of and demand for foreign exchange
The objective behind creating special economic zones is to encourage foreign investors to make foreign direct investment. However, for the foreign investors to make investments it is necessary that the conditions are favorable for their businesses. The government can achieve this by creating certain areas as special economic zones with reduced taxes and relaxed financial and environmental regulations. Only then would the government be able to encourage rapid economic growth.
Special economic zones broadly divided into more specific zone types namely
* Export Processing Zones (EPZ)
* Free Zones (FZ)
* Free Trade Zones (FTZ)
* Industrial Parks or Industrial Estates (IE)
* Free Ports
* Urban Enterprise Zones
* Generation of additional economic activity
* Promotion of exports of goods and services
* Promotion of investment from domestic and foreign sources
* Creation of employment opportunities
* Development of infrastructure facilities
* Maintenance of sovereignty and integrity of India, the security of the State and friendly relations with foreign States
Special economic zones definitely promote growth and investment as proved by the different success stories in different parts of the world. With different success stories in the making, special economic zones are something that needs to be encouraged rather than opposed.

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