Read chapter 9 and respond to the following questions:
1. It is stated in the assigned chapter that currency markets do not seem to pay attention to the various theories surrounding exchange rate determination. State and describe in detail an example of this phenomenon (concept) that explains this type of confusion over exchange rate changes.
2. State and describe in detail, the concept that explains why so many countries have pursued numerous competitive devaluations over the years.
3. What key factor motivates a country’s intervention in the FX markets to alter economic and financial fundamentals that may drive capital into and out of specific currencies? Provide detail for your response.