Balance of trade announcements and movements in exchange rates - a review.

Abstract

A review of the paper "Balance of trade announcements and movements in exchange rates". The paper focussed on short run movements in exchange rates in reaction to the United States Commerce department's monthly announcements of merchandise trade balances. It sets out to explore the relationship between monthly merchandise trade announcements, the spot and forward exchange rates and the possible reaction of the Federal Reserve system to the depreciation or appreciation of the dollar resulting from an announced deficit/surplus in the merchandise trade account. The attraction of the study lies in its identification of the possible impact of trade announcements on spot and forward exchange rates as well as its inquiry into whether capital flows, and interest rates are contributing factors to the outcome of merchandise trade balance. It also made an in-direct reference to the impact of interest rates on merchandise trade balance.