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Currency valuation (with respect to other currencies) is an important parameter in finance, but how is it related to the cash reserve ratio?

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In the title for your question, you use the term "cash reserve ratio". Do you mean "foreign reserves" as in, the foreign reserves that a country might use to defend its currency? Or are you talking about "bank reserves" as it applies to interest rates, and then how interest rates affect the associated exchange rates? –  bill_080 Apr 19 '11 at 16:54
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up vote 1 down vote accepted

Here's a little bit of everything.

1) Some papers on foreign reserves that are used to defend a country's currency, and the flexibility of their exchange rate:

http://www.imf.org/external/pubs/ft/wp/2001/wp0118.pdf

http://www.eusanz.org/pdf/conf04/choi_baek.pdf

2) Some papers on generic modeling of exchange rates:

http://faculty.darden.virginia.edu/warnockf/GFM/BP-0496%20Exchange%20Rate%20Models.pdf

Figure 1 in the above link is a common view of the short/medium/long-term variables that affect exchange rates.

http://www.federalreserve.gov/Pubs/Ifdp/2003/779/ifdp779.pdf

3) If you're trying to play with exchange rates as a retail investor, you need to be aware of the game/scams:

http://articles.latimes.com/2011/apr/03/business/la-fi-amateur-currency-trading-20110403

http://en.wikipedia.org/wiki/Forex_scam

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