The Power of Exchange Rates

Authors

  • Eduardo Michel Vargas Universidad Católica Boliviana Author

DOI:

https://doi.org/10.35319/4yzs4702

Keywords:

Exchange rate, Competitiveness, Overvaluation, Economic development

Abstract

The article explores the strategic role of exchange rates in a country's economy. Although widely used in business and finance, their importance is often underestimated. It highlights the case of Argentina under Menem, where an overvalued currency led to recession, debt, and a loss of competitiveness. In contrast, China is presented as a successful example, having maintained a fixed, undervalued exchange rate for over two decades, helping it become a global economic power. The article concludes that both overvaluation and undervaluation have significant effects, and exchange rate policy should be aligned with economic goals such as boosting competitiveness, controlling inflation, or accelerating growth.

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Author Biography

  • Eduardo Michel Vargas, Universidad Católica Boliviana

    He holds a Bachelor’s degree in Economics from the Universidad Mayor de San Simón (UMSS), and has completed postgraduate diplomas in Higher Education from the Universidad Católica Boliviana (UCB) and in Regional Planning from the Istituto di Sviluppo Economico in Naples, Italy. He earned his Master’s degree from Rutgers University in New Jersey, United States. He currently serves as Dean of the Faculty of Economics at UMSS. He has held the position of Acting President of the Unified Fund Board and currently serves as Director and Second Vice President of the Board of Directors of Banco de la Unión. He teaches undergraduate and graduate courses at the Universidad Católica Boliviana and has been honored with the Professional Merit Award by the Federation of Professionals of Cochabamba.

References

Fortune, Powell Bill: “China Buys the World” publicación de 26 de octubre de 2009

Krugman Paul, Obstfeld Maurice “Economía Internacional-Teoría y Política” Edit. Addison Wesley. 2001

La Voz, Dietrich Heinz: “Kirchner y la bomba nuclear monetaria” publicación de 22 de septiembre de 2003

Perspectivas: Michel Vargas Eduardo “El desafío chino” publicación de la UCB año 8, Nº 1, 2005

Perspectivas: Michel Vargas Eduardo “Nuevo orden económico mundial” publicación de la UCB año 12, Nº 24, 2009

Stiglitz Joseph E “El malestar en la globalización” Edit Taurus 2002

The Power of Exchange Rates

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Published

2010-11-30

Issue

Section

Artículo de reflexión

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