Overview

leads and lags


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The ability of traders to bring forward or defer the timing of transactions. If a country's currency is expected to be devalued, importers have a strong incentive to buy now before import prices rise, and exporters have a strong incentive to delay selling goods, or delay converting the foreign exchange they get for them, as it is expected soon to be worth more. This ability to make changes in timing means that a country's currency can come under strong speculative pressure, even with apparently stringent exchange controls.

Subjects: Economics.


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