The price of a nation’s currency in terms of another currency. An exchange rate thus has two components, the domestic currency and a foreign currency, and can be quoted either directly or indirectly. In a direct quotation, the price of a unit of foreign currency is expressed in terms of the domestic currency. In an indirect quotation, the price of a unit of domestic currency is expressed in terms of the foreign currency. An exchange rate that does not have the domestic currency as one of the two currency components is known as a cross currency, or cross rate. |
Foreign aid refers to the transfer of goods, capital or services from an international organization or a country to offer some benefits or help to the recipient country. This aid comes in several forms for example; military, emergency humanitarian or economic aid. It is aimed at providing .
Pakistan receives foreign aid
From several different countries and international organization. Since the start of the War in Afghanistan, the majority of the Aid comes from the United States.The Majority of US assistance to Pakistan is from the Coalition Support Fund which is reimbursement to Pakistan for expenses already incurred and compensation for facilities made available to the coalition forces such as the Shamsi Airfield and Dalbandin air bases by Pakistan as well as $4 billion has been billed to CSF Fund for the training and services provided by American Military and contractors to Pakistan Security Forces .
Impacts of foreign aid on exchange rate
There are positive impacts of foreign aid on exchange rate. If in Pakistan there would be any foreign aid , that would increase the foreign reserves , that leads towards the appreciation in the domestic currency. Next this appreciation in currency will make certain changes in the economy. If there comes any foreign aid , that will surely inhance the supply of the foreign currency. Thus the exchange rate curve will...