With the nominal exchange rate held down by intervention, this could only come about through a rise in prices, creating expectations of future inflation and so reducing real interest rates.
Usually, when you leave an investment bank, you sign a severance agreement in which the bank agrees to pay you some nominal amount, in exchange for your promise not to say anything bad about the bank in public.
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To this end we invite Greece, private investors and all parties concerned to develop a voluntary bond exchange with a nominal discount of 50% on notional Greek debt held by private investors.
Exchange buys are still nominal in comparison to the total of ads placed on the Web each year.
Argentina is yet another country which has exchanged instability in its nominal economy, with a floating exchange rate, for instability in its real economy with a fixed exchange rate.
It would oblige Argentina to continue trying to adjust its real exchange rate by deflation (cutting nominal wages and prices in nominal terms), a process which has already forced the collapse of many businesses.
The fundamental difference is that under a fixed exchange rate real income declines must come through nominal income declines.
However, an increase in the real exchange rate need not require a rise in the nominal rate.
They are not using it as a medium of exchange, a unit of account, or a safe store of nominal value.
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Curiously, at the same time, economic stress can lead to manipulation of foreign-exchange rates, usually to keep local currencies relatively low even as nominal interest rates rise with inflation.
If the trade imbalance is sterilized and not allowed to affect the exchange rate, then there will be upward pressure on foreign prices and nominal incomes and downward pressure on U.S. prices and nominal incomes.
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