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Figures for Chapter 16
SPOT FX : FUNDAMENTALS
AND NOISE TRADERS
(Investments : Spot and Derivatives
Markets)
© K. Cuthbertson and D. Nitzsche
Figure 16.1 : Russian crisis: Rouble-U
exchange rate and relative MS
30
25
Rouble -Dollar exchange rate
20
15
10
5
Relative money supply
(M(Russ)/M(US))
0
Dec-96 Jun-97 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00
© K. Cuthbertson and D. Nitzsche
Figure 16.2a : Overshooting (long run)
r  = tight monetary policy
UK price level
£100
A
£99
C
12
UK interest rate
10
t=0
© K. Cuthbertson and D. Nitzsche
Time
Figure 16.2b : Overshooting (short run)
Appreciation of £
Expected depreciation of 2%
1.03
B
1.01
1.00
Exchange rate
A
12
C
UK interest rate
10
Time
t=0
© K. Cuthbertson and D. Nitzsche
Figure 16.3 : German mark-Pound
Sterling exchange rates (actual and PP
S (DMs per Pound Sterling)
3.2
PPP exchange rate
3
2.8
2.6
2.4
2.2
Actual exchange rate
2
1.8
Feb-90
Feb-92
Feb-94
Feb-96
© K. Cuthbertson and D. Nitzsche
Feb-98
Figure 16.4 : French franc-German
mark exchange rates (actual and PPP)
4
S (FRF per DM)
Actual exchange rate
3.5
3
PPP exchange rate
2.5
2
Oct-89
Oct-91
Oct-93
Oct-95
© K. Cuthbertson and D. Nitzsche
Oct-97