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The Dollar-Pound Exchange Rate - Essay Example
The dollar pound exchange rates have been pretty mobile and have affected the investors and the traders drastically since the pre-second world war years. During the major shake up in the 1930s, a number of traders lost their money when there was a sudden market depression which led to a crashing pound against dollar…
This coupled with the devaluation of the pound sterling, in a bid to reduce the domestic credit in UK, brought down the exchange rates against pound sterling. But there was always an opinion and not wrongly, that the market was predominantly controlled during those days by speculators which was possibly the single largest reason to work against the interests of pound sterling.
Though this was the scene in September 1931, the scene has not undergone drastic changes in terms of operational methods. The number of players in the market, speculators, traders and the countries interacting with one another has all increased. But then the basic working of the market remains more or less similar to the pre-war condition in the case that it is controlled by the speculators of the market to a great degree. The market has been set aside as Futures for the speculators. But then the futures carry a very special impact on the over all exchange rates of the currencies on the bourse. The aim of this research is to study the impact of the futures market on the currency exchange rate across the counter.
The objective of the research is to identify a relationship either empirical or otherwise between the futures market and that of the spot business after passage of a specific time. ...