Teori Keseimbangan Nilai Tukar dan Penentuan Nilai Tukar /Ekonomi Keuangan Internasional

Summary

This session dives into the theory of exchange rates and their determination. It covers the concept of equilibrium exchange rates, influenced by supply and demand. Various theories of exchange rate determination are discussed, including perfect capital mobility, risk aversion, and hedging strategies. Additionally, the video explores the Law of One Price, Purchasing Power Parity (PPP), trade balance theory, and the monetary approach. The session concludes by emphasizing the intricate relationship between exchange rates, prices, and international trade, providing a comprehensive overview of these economic principles.

Takeaways

• 😀 Exchange rates are the price of one currency in terms of another currency and are influenced by demand and supply.
• 😀 The equilibrium exchange rate occurs when the quantity demanded equals the quantity supplied.
• 😀 The law of demand states that if the price of a currency decreases, the demand for it will increase, and vice versa.
• 😀 According to the law of supply, if the value of a currency increases, the supply of it will also increase, and vice versa.
• 😀 Perfect Capital Mobility assumes that capital can move freely across borders, impacting exchange rates based on interest rates and returns on assets.
• 😀 Risk aversion theory explains that investors are more likely to choose riskier assets with higher returns as compensation for the risk involved.
• 😀 Hedging is a strategy used to minimize risks in investments by taking opposite positions in related assets.
• 😀 The Law of One Price asserts that identical goods in different countries should have the same price when expressed in the same currency.
• 😀 Purchasing Power Parity (PPP) suggests that exchange rates are adjusted to reflect differences in price levels between two countries.
• 😀 The Trade Balance theory indicates that exchange rates are influenced by the relative imports and exports between two countries.
• 😀 The Monetary Approach to exchange rate determination focuses on the demand and supply of currencies, impacted by inflation and interest rates.

Q & A

What is the definition of exchange rate as explained in the video?

The exchange rate is the price of one unit of foreign currency in domestic currency, determining the value of foreign currency against the domestic currency.

How does the law of demand affect the exchange rate?

According to the law of demand, when the price of a currency is lower, more buyers will be attracted, while if the price is higher, the demand will decrease.

How does the law of supply relate to exchange rate fluctuations?

The law of supply states that when the value of a currency is high, the supply of that currency also increases. Conversely, if the value of the currency is low, the supply decreases.

What happens when the exchange rate reaches equilibrium?

Equilibrium occurs when the quantity of currency demanded equals the quantity of currency supplied, stabilizing the exchange rate.

What is perfect capital mobility, and how does it relate to exchange rate determination?

Perfect capital mobility is a theory where assets are assumed to be freely movable across borders. It assumes that there is no difference in interest rates for assets, leading to a direct impact on exchange rates.

What is meant by risk aversion in exchange rate theory?

Risk aversion refers to the reluctance of investors to take on risky assets. Investors prefer safer assets unless the higher returns from riskier assets compensate for the risk.

How does hedging play a role in exchange rate determination?

Hedging is a strategy to minimize investment risk by taking opposite positions in assets. It helps reduce the potential loss in value of assets, influencing exchange rate movements.

What is the 'law of one price' and how does it affect exchange rates?

The law of one price states that identical goods should sell for the same price in different locations when expressed in the same currency. This principle influences exchange rates by equalizing prices across borders over time.

What are the two versions of the purchasing power parity theory?

The two versions of purchasing power parity are the absolute version, which suggests that identical goods should cost the same worldwide when expressed in a common currency, and the relative version, which adjusts exchange rates based on the inflation rates of different countries.

How does the trade balance theory explain exchange rate determination?

The trade balance theory suggests that exchange rates are influenced by the volume of goods and services exchanged between two countries. A surplus or deficit in trade impacts the value of the currencies involved.