Select a newspaper, magazine, or Internet article published in 2020-2021 that is related to determinants of currency exchange rate. Discuss the article using relevant economic concepts and theories.

As from the earlier years, possibly 2001, Argentina has been facing a financial crisis. This implies that the banks in the country have survived to a greater or lesser extent by taking spread as far as the rates they pay to those who deposit their money with them. Also, the return that they also get from activities that include investing in both government and central bank securities is taken. The importance of the margin affecting the total net income has gone down. On a normal basis, it has been apart since the year 2017. After the results of 2001, the banks started generating their incomes through fees and commissions, but all this was under a strict administration.

It seemed like the government had developed strict policies that would check on fee collection and inter rates. During the dwindling of revenues, the income from the securities is the one that made the banks stay all that time afloat. In this case, the situation that will be experienced is that banks will get back to the old revenue systems, which are purely from the transactional business-related models. Hence, they will be looking for fee revenues, and as expected, the credit growth will be lower than that of inflation.

There is going to be an aspect of subsidized lending of money to the public. The banks are also going to have it hard when it comes to maintaining real returns henceforth. According to the business concepts, the indirect impacts of exchange rates and fluctuations do extend broadly in various ways that affect our lives as far as the economy is concerned. A weak domestic currency is vulnerable as it can easily push up an inflation rate in any nation that is importing large amounts of products. On the other hand, a strong currency is capable of depressing inflation as well as supporting currency.

A weak domestic currency brings about economic growth when there is an export that is boosted. The move by the Central Bank of Argentina to make all the other banks’ freeze will be bad, especially at the points where the economy at one time will need credit, and considering the fiscal challenges that face the public banks, then the large books of non-performing loans will have to reduce the lending capacity through making subsequent increases in dividend payments to the cash strapped state. A decrease in foreign exchange affects the bank in case it touches on the same.

Central Bank intervention occurs when any central bank buys or sells its currency in any foreign market so that its value against the other currency is raised or lowered depending on circumstances. The central bank will tend to intervene when the country is going down in terms of currency. Usually, when there is a decline in the value of the currency, the prices of imported goods and services will increase. This will result in inflation, and in any case, the central bank in any country will increase its interest rates and the banks, which may impair market growth.

Source: Argentina’s banks go from deep freeze into fire

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Academic.Tips. (2022) 'Select a newspaper, magazine, or Internet article published in 2020-2021 that is related to determinants of currency exchange rate. Discuss the article using relevant economic concepts and theories'. 17 November.

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Academic.Tips. (2022, November 17). Select a newspaper, magazine, or Internet article published in 2020-2021 that is related to determinants of currency exchange rate. Discuss the article using relevant economic concepts and theories. https://academic.tips/question/select-a-newspaper-magazine-or-internet-article-published-in-2020-2021-that-is-related-to-determinants-of-currency-exchange-rate-discuss-the-article-using-relevant-economic-concepts-and-theories/

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Academic.Tips. 2022. "Select a newspaper, magazine, or Internet article published in 2020-2021 that is related to determinants of currency exchange rate. Discuss the article using relevant economic concepts and theories." November 17, 2022. https://academic.tips/question/select-a-newspaper-magazine-or-internet-article-published-in-2020-2021-that-is-related-to-determinants-of-currency-exchange-rate-discuss-the-article-using-relevant-economic-concepts-and-theories/.

1. Academic.Tips. "Select a newspaper, magazine, or Internet article published in 2020-2021 that is related to determinants of currency exchange rate. Discuss the article using relevant economic concepts and theories." November 17, 2022. https://academic.tips/question/select-a-newspaper-magazine-or-internet-article-published-in-2020-2021-that-is-related-to-determinants-of-currency-exchange-rate-discuss-the-article-using-relevant-economic-concepts-and-theories/.


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Academic.Tips. "Select a newspaper, magazine, or Internet article published in 2020-2021 that is related to determinants of currency exchange rate. Discuss the article using relevant economic concepts and theories." November 17, 2022. https://academic.tips/question/select-a-newspaper-magazine-or-internet-article-published-in-2020-2021-that-is-related-to-determinants-of-currency-exchange-rate-discuss-the-article-using-relevant-economic-concepts-and-theories/.

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"Select a newspaper, magazine, or Internet article published in 2020-2021 that is related to determinants of currency exchange rate. Discuss the article using relevant economic concepts and theories." Academic.Tips, 17 Nov. 2022, academic.tips/question/select-a-newspaper-magazine-or-internet-article-published-in-2020-2021-that-is-related-to-determinants-of-currency-exchange-rate-discuss-the-article-using-relevant-economic-concepts-and-theories/.

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