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1. Think about the recent monetary policy in both the U.S. and Eurozone. How has this...

1. Think about the recent monetary policy in both the U.S. and Eurozone. How has this policy influenced the value of both the USD and the Euro?

2. Offer some pros and cons for a country to control its exchange rate. China is a good example but there are others. In providing the pros and cons explain each rather than just listing.

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Answer #1

The monetary policy in Both Eurozone by ECB and in USA by Federal reserve is expansionary monetary policy is cutring diwn interest rates which has deprecuated both US dollar and Euro. However Us faces trade war with Chija while Europe faces Issues of Brexit deal which has worsened the value of both currencies.

The pros of controlling exchanges rate is forex reserves stability, reduced volatility, improved curent account deficit and trade regime.

Cons include excessive pressure on interest rates, export import policy and levies and lastly destabilising inflation regime kf monetary policy.

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