Showing posts from April, 2011

The Exchange Rate Story (1)

Dollar rate is changed. Maldives currency lost the value. Our economy is going to collapse. We are getting poorer. These are some of the talks that has dominated our life in the past 3 days. All these came after the government announced a controlled floating of the Maldivian Ruffiyaa by 20% higher or lower to the pegged value of MRF12.85. In other words, the government permitted buying and selling of US Dollars between MRF10.28 to MRF 15.42 instead of the fixed rate. Many wonder what will be the outcome. Just like everything else is Maldives, several people decided the right or wrong of the decision taken depending on the political group or party they follow or believe in. Yet, this may not be the very right decision when it comes to our own economy. So, as someone who has interest in the topic, I thought of posting an article on this very matter. However, we need to know what this is, before we try to think of the impact it could bring on us. What is exchange rate actually? Excha