Exchange Rate Determination -APA STYLE-NEW REFERENCES – NOT LESS THAN 5 REFERENCE

Critical Thinking: Saudi Arabian Riyal and the U.S. Dollar (110 Points)

While Saudi Arabia seeks to diversify its economy, the Saudi economy is dominated by the petroleum sector. In addition, the Saudi Arabian Riyal (SAR) is pegged to the U.S. Dollar.

In a critical essay, discuss the advantages and disadvantages of the pegged exchange rate. Indicate the main considerations Saudi Arabia faces from a currency perspective (e.g., currency values, interest rates, inflation, and trade issues) that ensue given two scenarios:

• The first scenario is a dramatically declining world oil price.
• The second scenario is a dramatically increasing world oil price.

Directions:

• Your essay is required to be four to five pages in length, which does not include the title page and reference pages, which are never a part of the content minimum requirements.
• Support your submission with course material concepts, principles, and theories from the textbook and at least three scholarly, peer-reviewed journal articles. Use the Saudi Digital Library to find your resources.
• Use Saudi Electronic University academic writing standards and follow APA style guidelines.
• It is strongly encouraged that you submit all assignments into Turnitin prior to submitting them to your instructor for grading. If you are unsure how to submit an assignment into the Originality Check tool, review the Turnitin – Student Guide for step-by-step instructions.
• Review the grading rubric to see how you will be graded for this assignment.
• For Your SuccessModule 11 explores currency exchange and exchange rates. Pay attention to the different short-run and long-run factors that determine the exchange rates. The long-run determinants of exchange rates are relative productivity levels, relative price levels, consumer preferences for domestic or foreign goods, and trade barriers. What is overshooting?This week, you have a Critical Thinking Assignment that is due. Please review the assignment directions now, and contact your instructor with any questions. There is also a required Live Session discussion with the instructor this week.Learning Outcomes
  1. Describe the structure and workings of the global foreign exchange market.
  2. Analyze how exchange rates are determined by the currency supply and demand.
  3. Analyze the determinants of exchange rates in the short, medium, and long term.

  ReadingsRequired:Chapter 12 in International EconomicsOfer, A., & Varon, E. (2019). Turkish currency crisis- spillover effects on European banks. Borsa Istanbul Review, 19(4), 372-378.Recommended: Chapter 12 PowerPoint slides Chapter 12 PowerPoint slides – Alternative Formats – International EconomicsHiro, I., & McCauley, R. (2019). A key currency view of global imbalances. Journal of International Money and Finance, 94, 97-115.Muhammad, A., & Iftikhar, A. (2019). Empirical investigation of foreign direct investment and current account balance in East Asian economies. Journal of Commerce & Social Sciences, 13(3), 779-795.