Suppose that you had business holdings in a small country that had borrowed from the IMF because of serious debt problems The IMF recommended that the small country peg its exchange rate at the equilibrium level You observed that the country 's foreign exchange reserves were falling very rapidly Do...

Unfortunately the small country has not pegged its currency at the equilib ...

Suppose that you had business holdings in a small country that had borrowed from the IMF because

Question:

Suppose that you had business holdings in a small country that had borrowed from the IMF because of serious debt problems. The IMF recommended that the small country peg its at the equilibrium level. You observed that the country's foreign exchange reserves were falling very rapidly. Do you think the country's was undervalued or overvalued? Why? As a business manager, what actions might you take, if any, to increase your profits or to protect your business interests?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...