Respuesta :
Assume that brail and Mexico have floating exchange rates. all else held constant, if the price level is stable in Mexico but basil experiences rapid inflation then The Brazilian real will depreciate.
Does Mexico's currency have a variable rate?
The Mexican peso has been fluctuating freely on the basis of market forces for more than 20 years. Because of this, foreign exchange interventions have not been employed to determine the exchange rate since 1995.
Does Brazil's currency have a variable rate?
After currency crises, several emerging market economies (EMs) switched to a floating exchange rate system. Brazil has been operating under a floating regime with inflation targeting since 1999.
How are floating exchange rates calculated?
Exchange rates in a floating regime are typically governed by the forces of supply and demand for foreign currency. The major currencies of the world, including the US dollar, the euro, the Japanese yen, and the British pound sterling, have all long employed a floating exchange rate system.
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