Interest rate movements affect exchange rates.Speculators can use anticipated interest rate movements to forecast exchange rate movements.They may decide to purchase securities in particular countries because of their expectations about currency movements, since their yield will be affected by changes in a currency's value.These purchases of securities require an exchange of currencies, which can immediately affect the equilibrium value of exchange rates.

Please respond to the questions below and respond to at least on other student.

1. Compare and contrast the fixed, freely floating, and managed float exchange rate systems. What are some advantages and disadvantages of a freely floating exchange rate system versus a fixed exchange rate system?

2. Should the governments of Asian countries allow their currencies to float freely?What would be the advantages of letting their currencies float freely?What would be the disadvantages?

3. During the Asian crisis, some Asian central banks raised their interest rates to prevent their currencies from weakening.Yet, the currencies weakened anyway.Offer your opinion as to why the central banks' efforts at indirect intervention did not work.

please cite sources